Chapter 8 MKT 348
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 (2) self-positivity bias (3) Negativity bias (4) Mood and bias (5) Prior brand evaluations (6) Pior experience' (7) Difficulty of mental calculations
Marketers can do several things to make sure that their brand serves as a positive anchor in anchoring adjustment decisions:
(1) First, they can focus consumers' attention on those attributes that place the brand as the best in its class. Ex: by focusing attention on its distinctive design and technology, Fitbit has made its wearable activity tracker the anchor for that product category (and become the market leader). (2) Marketers can also try to affect the set of other products that consumers use in their adjustment. Ex: Detroit-based Shinola encourages buyers to think of fashion classics when they think of its vintage-inspired, premium-priced wristwatches, leather goods, and other made-in-America products
Cognitive models describe the processes by which consumers combine 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 (see Exhibit 8.5).
Given the importance of judgment in consumers' information processing, marketers need to understand judgments about:
(1) likelihood, (2) goodness or badness, and (3) mental and emotional accounting
Marketers can also affect judgments of goodness and badness in several ways.:
(1) making consumers feel good -manipulating their moods or priming consumers with positive feelings before giving them information will lead them to evaluate the offering more positively (2) asking consumers to imagine the attributes or benefits of a product or service -A particular kind of pizza will be judged as better than other kinds when consumers imagine how delicious it tastes. It will be judged as worse when consumers imagine the grease it might have on top of it.
Mood and bias: consumer judgment
(1) mood can serve as the initial anchor for a judgment. -If you are in a good mood when browsing a menu, you will probably respond positively to new items you might try. (2) moods bias consumers' judgments by reducing their search for and attention to negative information. (3) mood can bias judgments by making consumers overconfident about the judgments they are reaching.
The consumer first makes a decision about whether or not to buy and then focuses on the selection decision; the selection decision involves other decisions such as:
(1) what offerings to consider, (2) what factors are important to the choice, (3) what choice to actually make, (4) whether to make a decision now or to delay a decision, and (5) how to make choices when alternatives cannot be compared.
Particularly valuable to marketers during the planning of new products is the input of consumers who have an "emergent nature":
(i.e., they can imagine how product ideas might be developed into actual products).
elimination-by-aspects model
-Consumers first order attributes in terms of importance and 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.
compensatory 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 (i.e., they make judgments about goodness and badness) and weight them in terms of how important the attributes are to their decisions.
disjunctive model
A noncompensatory model that sets acceptable cutoffs to find options that are "good." (1) the consumer sets up acceptable levels for the cutoffs—levels that are more desirable (find the "good ones"). (2) the consumer bases evaluations on several of the most important attributes rather than on all of them, putting the weight on positive information.
multiattribute expectancy-value models
A type of brand-based compensatory model. Ex: consumers facing emotionally difficult tradeoffs between price and quality may cope by choosing the offering with the best quality; some consumers may simply avoid making tradeoffs between conflicting attributes
If most consumers are using a compensatory strategy, switching them to a noncompensatory strategy may be advantageous, particularly if competitors' products have a major weakness:
By convincing consumers not to accept a lower level of an important attribute—that is, not to compensate for the attribute—marketers might prompt some consumers to reject competitors' products from consideration.
Self-positivity bias
Consumers can make judgments about the extent to which they or others are vulnerable to having bad things happen to them (e.g., contracting AIDS, getting into an automobile accident). -they tend to believe that bad things are more likely to happen to other people than to themselves.
Imagery, or visualization
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. -may form a positive bias when they imagine themselves using the product. -lead consumers to overestimate how satisfied they will be with a product or service -also plays a major role in judgments of likelihood and goodness and badness
Early research on framing studied people's willingness to take risks in a gamble. Results showed that people are more willing to take risks when a choice is framed as avoiding a loss rather than as acquiring a gain.
Decision framing example
When comparing various prices or discounts, the ease or difficulty of calculating the difference will affect consumers' judgment of the size of these differences. When consumers have little difficulty mentally calculating the difference between two or more prices or discounts, they may think the numerical differences are larger than in reality, which will bias their judgment of the choices.
Difficulty of mental calculations
Another marketing strategy is to frame or reframe the decision:
For example, a marketer might emphasize emotional benefits rather than functional benefits of a product. The Melt, a San Francisco-based chain of grilled-cheese restaurants, focuses on its sandwiches and burgers, tomato soup, and soft-serve ice cream as nostalgic food that "just makes people happy."
Second, marketers can identify and market to large segments of consumers who have similar goal-related or usage-context categories:
For example, the LEGO Group has introduced a video game called Dimensions, targeting the segment of fans interested in both LEGO building sets and digital play activities. The game allows players to create customized mashups featuring their favorite LEGO minifigures such as Batman and Doctor Who by moving them around a special game base connected to the video game
________________ consumers want to develop themselves and select life-enriching vacations and books.
Future-oriented
For example, if you are planning a trip, you might judge whether the fact that Europe is cold this time of year or the fact that European travel can be expensive is good or bad.
Judgments of goodness/badness
decision-making
Making a selection among options or courses of action.
__________________ models require less cognitive effort than compensatory models do because consumers set up ________________ for each attribute and reject any brand with attribute rankings below the cutoff.
Noncompensatory; cutoff levels
extremeness aversion
Options that are extreme on some attributes are less attractive than those with a moderate level of those attributes.
attribute balancing
Picking a brand because it scores equally well on certain attributes rather than faring unequally on these attributes.
_____________________ consumers want to improve their current well-being and prefer products that help them to do so, such as relaxing vacations and entertaining books.
Present-oriented
When consumers judge a brand to be good based on their past exposure to it, they may subsequently fail to learn (and view as important) information about the brand's attributes that affect its actual quality. In effect, the favorable brand name "blocks" learning about quality-revealing product attributes that should affect consumers' judgments.
Prior brand evaluations
_____________ consumers, whose goal is to maximize gains and positive outcomes, will put more emphasis on whether they think they have the skills and capacity to use the product to achieve the goal they seek and put less emphasis on the effectiveness of the product itself.
Promotion-focused
__________ of the brand name and messages in marketing communications are needed to ensure that the brand name is "top of mind."
Repetition
Marketers can affect consumers' perceptions of how probable things are (i.e., likelihood estimates):
Research shows that consumers primed to consider their family ties are more likely to take a financial risk because they realize that their family can help cushion a monetary loss. However, consumers are less likely to take a social risk when thinking about family ties because of the way that a negative outcome might affect their family.
First, marketers can position an offering as being consistent with consumers' goal-related or usage categories:
That way, marketers can influence the way that consumers frame the decision, and consumers will be more likely to consider the brand and important related information. For example, Tesla markets its premium-priced electric cars as eco-friendly and high-tech, for consumers who want to protect the environment and be on the cutting edge of car technology.
decision framing
The initial reference point or anchor in the decision process.
emotional accounting
The intensity of positive or negative feelings associated with each mental "account" for saving or spending.
affective decision-making models
The process by which consumers base their decision on feelings and emotions.
noncomparable decisions
The process of making a decision about products or services from different categories. -marketers might identify the abstract attributes that consumers use to make these noncomparable evaluations. -consumers adopt an alternative based strategy or attribute based strategy
anchoring and adjustment process
They first anchor the judgment based on some initial value and then adjust or "update" the evaluation as they consider additional information. (when making judgments about likelihood and goodness/badness) -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.
_________ priming leads consumers to evaluate products on the basis of alternatives, whereas ________ priming leads consumers to evaluate on the basis of attributes.
Time; money (a marketer can influence whether consumers use an alternative-or attribute-based evaluation strategy by first priming either time or money)
When consumers reject a brand using a noncompensatory strategy, marketers can try to switch them to using a compensatory strategy by arguing that other attributes compensate for a negative:
To illustrate, advertising for high-priced, premium brands often stresses the reasons why its offerings are worth the extra money so that consumers do not reject them on price alone.
compromise effect
When a brand gains share because it is an intermediate rather than an extreme option. -When consumers see the attributes of one alternative as being equally dispersed (rather than very close together or very far apart), they will view this alternative as the compromise option even when it is not at the overall midpoint among options.
endowment effect
When ownership increases the value (and loss) of an item.
conjunctive model
a noncompensatory model that consumers set up minimum cutoffs for each attribute that represent the absolute lowest value they are willing to accept. -to rule out unsuitable alternatives (get rid of the "bad ones") as soon as possible, something that consumers do by weighing negative information
When consumers are exposed to a brand extension, the existing brand name and its positive associations often serve as the ________ for judgments of the new product.
anchor
A product's country of origin can also serve as an _______ and influence subsequent ___________.
anchor; judgments
Walt Disney is strongly associated with the United States and, thanks to its theme parks, movies, and memorable cartoon characters, it has a strong brand image worldwide. So when Disney opened a series of English-language schools for children in China, it used the "Disney" name as a positive initial anchor and encouraged consumers to see the schools—where cartoon characters are incorporated into lessons—as an update to that anchor
anchoring and adjustment process
judgments
are evaluations or estimates regarding the likelihood that products and services possess certain features or will perform in a certain manner -do not require a decision
A consumer making a laptop purchase might collect information about an Apple model and make a judgment about it before moving on to the next brand.
brand processing
Expert consumers have more ________________ prior experience and knowledge and, as a result, tend to use brand-based decision strategies.
brand-based
Imagery encourages ______________________ because images are organized by brand rather than by attribute.
brand-based processing
To illustrate, for some U.S. consumers, a negative feature of Chinese products is that they are not made in America. However, this evaluation can be overcome if the products rate highly on other criteria deemed important, such as price.
compensatory model
Cognitive decision-making models can be classified along two major dimensions: (a) whether processing occurs one brand at a time or one attribute at a time, and (b) whether they are ________________ (bad attributes can be compensated for by good ones) or ___________________ (a bad attribute eliminates the brand).
compensatory; noncompensatory
consumers set up minimum cutoffs for each attribute that represent the absolute lowest value they are willing to accept
conjunctive (noncompensatory) model
The __________________ is very important to marketers because it affects what brands consumers are choosing among and hence whom the marketer is competing against.
consideration set
The most important implication is that it is critical for a company to get its brand into the consumer's __________________; otherwise, there is little chance that the brand will be chosen.
consideration set
Negativity bias
consumers give negative information more weight than positive information when they are forming judgments. - when they are forming opinions about something that is very important to them and for which they wish to have as accurate a judgment as possible (e.g., which college to attend) -consumers do not engage when they are already committed to a brand
attribute-based strategy
consumers make comparisons easier for themselves by forming abstract representations that will allow them to compare the options. In this strategy (also called bottom-up processing), the choice is constructed or built up. Ex: 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."
noncompensatory model
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.
Prospect theory has a number of important marketing implications:
consumers will be more risk averse and unwilling to buy the product when the decision involves losses. -Thus, marketers must make an effort to reduce risks and potential losses Example: manufacturers and retailers make offers such as the "full money-back guarantee" or "no money down for 12 months with no interest" as well as provide warranty programs
The relevance and importance of various decision criteria, in turn, depend on:
consumers' goals, the timing of their decision, and how the decision is framed or represented.
Consumers are more likely to understand their preferences and decisions when they have detailed _________________—meaning that they can articulate exactly why they like or dislike the brands that they do.
consumption vocabularies For example, a consumer who is an expert in wine may know that he or she likes wines that are buttery, dry, and smooth, whereas a novice might not know how to articulate these preferences.
Cognitive decision-making models
describe how consumers systematically use information about attributes to reach a decision.
So even though $10 per hour may be the highest payment a consumer will accept for a car rental, $8 per hour may be more acceptable, especially if the rental will cover several hours.
disjunctive model
For example, consumers concerned that an electric car won't take them far enough on a single charge may be reassured by the growing number of recharging stations being installed across the country.
elimination-by-aspects model being used by marketers to their advantage
Money received under negative circumstances (from a seriously ill relative, for instance) is more likely to be spent on a utilitarian purchase (such as tuition) than on a hedonic purchase (a trip) because the utilitarian purchase helps counter the negative feelings.
emotional accounting
For example, 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 or because they perceive selling as a self-threat) than buyers are willing to pay (gaining the item).
endowment effect
brand processing
evaluating one brand at a time
Characteristics associated with consumers can affect the decisions they make such as their:
expertise, mood, extremeness aversion, time pressure, and metacognitive experiences
Decisions can also be framed in terms of how the problem is structured in the _________________________, such as whether beef is presented as 75 percent lean or as 25 percent fat.
external environment
The opposite is true for decisions we anticipate making later: our criteria tend to be more __________ and __________; _______________ (e.g., which restaurant will create the best dining experience). When the decision outcome will be realized far in the future, consumers may consider the hedonic aspects of a decision (how good it will make me feel) to be more important than the more rational aspects of the decision (can I really afford it?).
general; abstract; high-level construals
marketers can increase sales of a high-margin item simply by offering a ____________ -priced option.
higher Ex: Amazon.com might increase the sales of its lowest-priced Kindle Fire tablet by offering higher-priced models with much more functionality. Even if the higher-priced models aren't best-sellers, they would make the lower-priced model look like a good deal.
Additional information from experience may adjust this initial value upward or downward. The same anchor can lead to two different judgments, depending on:
how the anchor is perceived -If the prior evaluation of Disney had been negative, the anchor would probably have resulted in a negative judgment
When faced with many available options, consumers often first decide which fall into an __________ set (those that are unacceptable), an ________ set (those they treat with indifference), and a ________________ set (those they want to choose among).
inept; inert; consideration
Another way to try to gain an advantage is by promoting comparisons of the brand with ___________ rather than with _________ or ____________ competitors.
inferior; equal; superior -this maximizes the attraction effect and results in a more positive evaluation of the brand
Example: if you see an ad for a new Italian restaurant, you can form a _________ as to whether you will like it, how different it will be from other Italian restaurants, or how expensive it will be. These can serve as important inputs into your decision about whether to eat at the restaurant, but they do not require that you decide whether to go there or not.
judgment
If the goal is flexibility in choice, the consumer will seek out a _________ assortment of choices; if the goal is to simplify the choice, the consumer will seek out a _______ assortment.
large; small
Consumers prefer _________ assortments when they are making an immediate decision, but prefer ________ assortments when the decision is distant in time or in location.
larger; smaller
For example, when we buy a good or service, we can attempt to estimate the __________ that it will break down, that others will like it, and that it will satisfy our needs.
likelihood
For example, when we view an ad, we can assess the _________ that it is truthful.
likelihood
One study on recycling behavior found that ___________ messages (we lose so much if we don't recycle) were more effective than gain-framed messages (recycling can make a difference) when consumers were asked to think concretely about recycling, as opposed to thinking abstractly about it. In contrast, ____________ messages worked better in promoting recycling behavior when consumers were asked to think abstractly, not concretely.
loss-framed; gain-framed (decision framing example)
prospect theory
losses loom larger than gains for consumers even when the two outcomes are of the same magnitude
If the decision is about something we will buy or do immediately (e.g., what restaurant to go to right now), our choices tend to be based on _____________ construals—specific, concrete elements such as how close it is to home, how much dinner will cost there, and who is coming along.
low-level
For example, we might have a "vacation" account (to pay for a trip), an "emergency" account (money held in reserve for unexpected expenses), and a "credit card" account (for credit purchases), each associated with a budget range or a dollar amount.
mental accounting
For example, if you love the school you are now attending, you are unlikely to think much about (or may even discount) any negative information you hear about it.
negativity bias
To illustrate, stressing an attribute like "historic" could make it easier for consumers to compare products. Then communications about travel destinations like Scotland could feature multiple attributes (historic landmarks, old-fashioned steam trains, majestic castles) and suggest how visiting the destination will fit the "historic" attribute.
noncomparable decisions
These models are called ______________ 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
attraction effect
occurs because the inferior brands increase the attractiveness of the dominant brand, making the decision easier. For example, a good brand can look even better when an inferior brand is added to the consideration set.
attribute processing
occurs when consumers compare across brands one attribute at a time -such as comparing each brand on price.
Time pressure
one of the major reasons that consumers fail to make intended purchases, can reduce shopping time, the number of impulsive purchases, and delays purchases
When the goal is to make a decision, consumers may evaluate products with unique, ____________ attributes and shared negative attributes as more favorable than products with unique, __________ attributes that share positive attributes.
positive; negative
If they focus on one brand at a time, they tend to judge that brand more _____________ than they would the average of the best brands within that category.
positively
______________________ consumers tend to preserve the status quo instead of making a decision that will result in a change because they want to avoid losses. In contrast, ____________________ consumers are more willing to try new things if they think that changing from the status quo will help them achieve their goals of growth and development.
prevention-focused; promotion-focused
Customers learn from their previous experiences, which can be helpful but may also bias judgments during future decisions. Imagine you are customizing a product (such as a laptop computer) to your own specifications. Based on your experience with decisions made early in the process, you will find subsequent decisions to be easier or more difficult. If later decisions are easier than earlier decisions, you will be more likely to upgrade to expensive features.
prior experience
Judgments of goodness/badness
reflect our evaluation of the desirability of the offering's features
When consumers are making a series of decisions, a __________ consideration set develops a maximizing mind-set, which will persist in subsequent decisions even if these decisions involve ____________ consideration sets.
smaller; ever-larger
assimilation effect
subsequent evaluations of options tend to be seen as closer to the initial anchor
estimation of likelihood
the determination of the probability that something will occur
alternative-based strategy (also called top-down processing)
they develop an overall evaluation of each option—perhaps using a compensatory or affective strategy—and base their decision on it. For example, if you were deciding on weekend entertainment, you could evaluate each option's pros and cons independently and then choose the one you liked the best.
confirmation bias
they will focus more on judgments that confirm what they already believe and will hold those judgments with more confidence ignore info counter to their judgments
Framing the _____________ can affect decisions as well. Consumers perceive health hazards as being more immediate and concrete if they are framed as occurring every day but regard them as less immediate and more abstract if they are framed as occurring every year.
time period
mental accounting
to categorize spending and saving decisions into "accounts" we mentally designate for specific consumption transactions, goals, or situations. -The way we mentally account for our money influences judgments about what, when, where, why, how, and how much we should spend or save, borrow, make payments, and behave as a consumer over time.
