Consumer Behavior Chapter 5 (Decision-Making)

More about Identifying alternatives stage:

****Most time-consuming phase Paradox of choice or tyranny of choice—choice burden -Too many choice options, you will not make a decision

Decision Rules

- Rules that consumers use to make decision; can be simple (e.g.,if...then...) to complex (e.g., compensatory). - compensatory rules: gives a product a chance to make up for itsshortcomings. - Typically, consumers who use compensatory rules are more involved withthe product. - Heuristics: mental rule of thumb to make a speedy decision! E.g., price-quality heuristics! Note: some heuristics are not always good for the consumer! Others: brand as heuristics; market beliefs (e.g., discount beliefs, brandparity, etc.) as heuristics; COO heuristics; etc..

Theory: The Bounded Rationality

1. Decision-makers are not aware of the problems that exist. 2. We do not have access to perfect information due to several constraints such as time, cost, and ability to process information 3. Therefore, they generate a partial list of alternatives based on other sources 4. Thus, rationality is limited 5. Assumptions of the theory: -Decisions are made based on incomplete information -Decision-makers will never succeed in generating all possible alternatives -Alternatives are evaluated incompletely always -The ultimate decision regarding which alternative to choose must be based on some criteria resulting in optimal decision

Extended Problem Solving

A purchase decision process during which the consumer devotes considerable time and effort to analyzing alternatives; often occurs when the consumer perceives that the purchase decision entails a lot of risk (financial, health, social) Something really important and central to one's self-concept

Behavioral Influence Perspective

AKA "The Passive Perspective" Suggests that consumers are passive and easily influenced by external factors such as marketing stimuli, social pressures, or situational factors Consumers have little control over their decisions and act on impulses or habits For example, a consumer who sees a new chocolate bar advertisement may buy it without much thought or consideration.

Traditional Perspective of DM

AKA Economic/rational perspective This perspective assumes that consumers are rational and seek to maximize their utility or satisfaction from their purchases. Consumers have perfect information, can compare all the alternatives, and choose the best one. For example, a consumer who wants to buy a car will evaluate all the available models based on their price, performance, features, and quality and select the one that offers the highest value for money. ***Dominant perspective but doesn't encompass human complexity. Consumers don't have perfect info

Satisficing Theory

Advances the concept of bounded rationality- because of decision-making constraints, decision-makers rely on limited and simplified knowledge, such that a compromise choice is selected The compromised choice is called satisficing rather than maximization This approach to decision-making involves choosing the first alternative that satisfies minimal standards of acceptability without exploring all the alternatives ****We don't want perfect things because we are okay with subpar options (comprised choice) ****Satisfiers, not maximizers!!!

What is the "Economics of Information Search" approach

Assumes that consumers gather as much information as needed to make an informed decision. Consumers continue to search until the utility exceeds the cost. In other words, there is no end to info search. . . you decide when to draw the line This utilitarian assumption (that the MOST valuable information is acquired. Additional information is absorbed only if it adds value to existing information) is NOT always supported: -Follow something b/c we're interested -If something is interesting to you, no matter how much info you get, you'll always want to learn about them

Determinant Attributes

Attribute used to differentiate between choice options ***Main attribute that used to choose (final determinant)

Autocratic decisions

Autocratic decision-making is a style of management where decisions are made unilaterally by one person, without input from other stakeholders.

Extrinsic Criteria

Brand, store image, price

Exemplar Products

Can dictate what choices you're going to shop for e.g., Burberry raincoats—they define the evaluative criteria for rest of the products in the category

Evoked set

Choices actively considered, positive evaluation, brands that matter to you

What are the two decision rules?

Compensatory and Non-compensatory rules

Compensatory (simple or weighted) decision rules

Compensatory decision rules allow consumers to balance the positive and negative aspects of each alternative. Consumers assign different weights or importance to each attribute and then compare each alternative's overall scores or values. For example, a consumer who wants to buy a smartphone may consider the battery life, camera quality, screen size, and price of different models and then choose the one with the highest total score based on their preference.

Non-compensatory decision rule

Does not allow consumers to trade off each alternative's positive and negative aspects. Consumers set minimum or maximum standards or thresholds for each attribute and then eliminate any alternative that does not meet them. For example, a consumer who wants to buy a laptop may have a budget of $1000 and only consider the models that are within that range, regardless of their other features.◦ E.g., if...then...rule;

Inert Set

Don't even consider Alternatives that do not enter consideration at all (no opinion)

Evaluative Criteria

Evaluate options based on criteria Dimensions used to judge the competing options—e.g., functional attributes to hedonic attributes

True or False: Variety seeking is not a decision-making style

False

Terms in a family decision-making context. . .

Family Life Cycle (FLC) Consensual purchase decision (i.e., agreed upon the need and differ in terms of how to achieve) Accommodative purchase decision (i.e., different preferences or priorities)

Habitual Decision-making

Feature of this DM: it's automatic Decisions are made with little to no cognitive effort Happens with routine purchases Automaticity -allows to minimize time and energy for mundane decision-making

Types of Consumer Decisions (based on the level of effort):

Habitual decision-making, Limited problem-solving, Extended problem-solving (From least effort to most effort) Effort as a function. A continuum: one end—routine or habitual decision-making; the other end, is extended problem-solving. Many decisions fall somewhere in the middle—limited problem-solving

Stage of the Traditional Perspective DM: Identifying the Alternatives

In this step, consumers evaluate the options they have identified as possible solutions to their problem or need. Consumers tend to evaluate alternatives by comparing their options to their internal criteria for evaluating alternatives and weighing the pros and cons of each. These criteria may include factors such as price, quality, features, benefits, brand image, social influence, and personal preferences. Criteria matters! Consumers may use different methods or rules to compare and rank the alternatives. ***Ppl consider different things for the same need, based off what they value

What are the logical factors of accommodative purchase decisions?

Interpersonal need Product Involvement Responsibility Power

What are two ways/types of problem recognition?

Need recognition- need (e.g. need a new wardrobe) Opportunity recognition- want (e.g. flashier wardrobe)

Limited Problem Solving

Not nearly as motivated as extended problem-solving decision-based on cognitive repertoire (storage you have in your head from past experiences), instead of starting the search from scratch

Describe the Inverted "U" relationship between the product search and expertise level

Novice—lack of search knowledge & non-functional attributes; Expert—selective search and functional attributes!

Inept set

Options you don't like or don't fit needs Alternatives that consumer knows but isn't considering (negative evaluation)

Gives examples of perceived risks that affect Information Search

Perceived risks: -Monetary (e.g., high ticket item) -Functional (e.g., risk capital for alternative means) -Physical (e.g., health products) -Social (e.g., fashion products) -Psychological risks (e.g., self-discipline/sacrifice/indulgence products).

List the types of Information Search

Prepurchase search vs. browsing vs. ongoing search (Little search before you go to the store vs don't have the intention of buying vs no definite timeline, big-ticket item) Internal search vs. external search (Search within mind or memory vs looking for advice outside) Deliberate search vs. accidental search (i.e., directed vs. incidental learning!) (focused search/looking for it vs just happened to learn about info)

What are the 2 types of problem demands?

Primary demand—use products or services regardless of the brand (e.g., Cotton, Inc.) Secondary demand—asked to prefer a specific brand over others (very specific) *****Primary demand must exist before secondary demand!

What are the stages of the economic/traditional perspective?

Problem recognition -> Information search -> Evaluation of alternatives -> Product choice -> Outcome **Stages are not straightforward Consumers might skip steps at times This perspective doesn't explain impulse buying

Stage of the Traditional Perspective DM: Problem Recognition

Refers to significant differences between one's current situation and some desired ideal state (homeostasis) In other words, a problem needs to be solved—simple, complex, large or small

Stage of the Traditional Perspective DM: Information Search

Refers to the process in which the consumer surveys his or her environment for appropriate data to make a reasonable decision Ex: ways you may search is on the Internet, ask friends, past experiences, etc.

Syncretic Decisions

Syncretic decision-making is a purchase decision in which all stakeholders have equal influence.

Parental Yielding

The process that occurs when a child's product request influences a parental decision-maker. Yielding drives many product selections because about 90% of these requests are for a specific brand

What are other decision-making styles?

There are decision-making styles For example, one study on teenagers identified three types ◦ Value-maximizing recreational shoppers ◦ Brand-maximizing non-utilitarian shoppers ◦ Apathetic shoppers

Emotional view or Experiential Perspective in DM

This perspective emphasizes the role of emotions, feelings, and moods in consumer decision-making and behavior. ***Choose not because of rationality but emotional inclination Consumers are not only rational or passive but also emotional and experiential. They buy products or services to satisfy their emotional needs or to create positive experiences. For example, a consumer who wants to go on a vacation may choose a destination based on how it makes them feel or what memories it evokes. Experiential perspective—high involvement, but does not entirely involve traditional view—stresses Gestalt.

Constructive Processing Perspective

This perspective focuses on how consumers acquire, process, and store information about products and services. Consumers are active and problem-solving agents who seek information from various sources and use heuristics or rules of thumb to simplify their decisions. Use heuristics (shortcuts), which happens a lot to brand-loyal customers For example, a consumer who wants to buy a laptop may search online reviews, ask friends for recommendations, and use brand names or warranties as cues. Involvement- how much of a bond you have with a product category, do research and become an expert Example: low (passive perspective) vs. high involvement (constructive processing)

True or False: Evoked set is a function of how many brands you're considering (retrieval) and environment

True

True or False: Many factors, such as the roles, authority, status, resources, values, and preferences of family members, can influence family decision-making.

True

True or False: The traditional perspective of DM places little importance on emotions and focuses on rational thinking

True

True or False: There are 4 total perspectives on decision-making

True

True or False: There are three categories we define DM based on the level of effort required.

True

True or False: Information search is influenced by prior expertise. Depending on the level of expertise, you might search more or less than someone else

True; Prior expertise makes a difference (e.g., novice vs. expert search)

Family decision making can involve. . .

Various aspects of family life, such as the purchase of products, the selection of educational practices, the choice of recreational activities, the use of disciplinary practices, and the deployment of limited resources.

Intrinsic Criteria

Within the product, can't be changed Color, quality, etc.

Family Decision-Making is. . .

a concept that refers to how families make choices, judgments, and plans that guide their behaviors.

Family decision-making can also be used to. . .

help families cope with challenges, such as child welfare issues, health care decisions, and legal matters.

Brand Switching

the opposite of brand loyalty. Brand switching occurs most often among customers who generally buy based on brand (because you must be committed to a brand already in order to switch)