MKT Consumer Behavior Exam 2 Short Answer Qs

Why would customers with a moderate knowledge of a product seek more information than either someone with no information or someone with extensive knowledge?

People with a very limited expertise may not feel they are capable of searching extensively. They are more likely to use shortcuts and utilize more abstract sources even when a search is undertaken. People with extensive knowledge already have the information they need or have most likely already learned how to successfully navigate the process.

Explain the meaning of covariation and provide an example from your own past buying behavior.

Covariation means that people will often make judgments about aspects of the product that they cannot really judge by using other aspects which are visible. Student examples will vary.

A customer searching for an SUV is trying to decide what to buy. She decides to limit her options by using the following strategy. First, the car must be a Honda or a Toyota because the customer believes that they have the highest quality. Second, the vehicle cannot cost more than $30,000 or get less than 10 miles per gallon. Third, the remaining vehicles' interiors, comfort, and instrument panel will be judged by giving each a score and summing them. The SUVs that are left, with the highest summed scores, will be selected for an intensive test drive. What type of decision rules was this customer proposing to use? There will be more than one rule used.

First: a heuristic. Honda and Toyota have high quality. Second: elimination-by-aspects. If an SUV is too expensive or gets poor gas mileage, it will not be considered. Third: a simple additive compensatory. The interior aspects of the vehicles will be summed.

What is a decision-making heuristic? Describe two typical heuristics used in consumer decision-making situations.

Heuristics are mental shortcut "rules of thumb" consumers use to save time and effort in the decision-making process. Heuristics may be based upon previous experience, reports from others, or beliefs. They may range from the very general (e.g., "Higher-priced products are higher-quality products.") to the very specific (e.g., "Buy Domino, that's the brand of sugar my mother always bought."). Typical heuristics include: ∙ Price/quality relationship-that price is positively correlated with quality is one of the most pervasive market beliefs; for the most part, it is justified. Novice consumers may in fact consider price as the only relevant product attribute. ∙ Reliance on a product signal-sometimes consumers tend to infer hidden dimensions of products from observable attributes. A common example is the clean and shiny exterior of a used car up for sale. Consumers lacking knowledge may use signals such as how long the company has been in business, how well-known the brand name is, price, and so forth-judgments that may be faulty. ∙ Common market beliefs-consumers have many beliefs about covariation, or relationships, in the marketplace, not all of which are accurate. For example, locally owned stores give the best service, all brands are basically the same, and so on. ∙ Brand names-when a consumer consistently purchases the same brand over time, he or she may do it out of true brand loyalty or simply from inertia because less effort is required; for example, the heuristic might be "I always buy Sony products." ∙ Country of origin-consumers' reactions to imports are mixed: in general, people rate their own country's products more favorably than they do foreign products; products from industrialized countries are more highly rated than those from developing countries. Certain items associated with specific countries may benefit from these linkages; for example, shoes made in Italy are prized.

Describe the loss-aversion bias and provide an example from your own experience.

Loss aversion means that people place much more emphasis on loss than they do on gain. Student examples will vary.

Explain the concept of narrative transportation and provide an example of a time from your own life that this state was triggered by an ad.

Narrative transportation means that people become immersed in the storyline being told in the ad. Student examples will vary.

Under what conditions would a customer resort to cognitive decision-making when presented with a problem characterized as a need recognition? Give an example.

Need recognition takes place when the actual state of the customer drops. A hot water heater that breaks is an example of a problem that involves a need recognition. A customer is more likely to resort to cognitive decision-making if the product has a high-perceived risk and/or when the customer is motivated by variables central to his or her self-concept.

Demonstrate how a marketer could use neuromarketing to advance the cause of his product. You may use any example you choose for your demonstration.

Neuromarketing uses functional magnetic resonance imaging (FMRI), a brain-scanning device that tracks blood flow as we perform mental tasks. Certain portions of the brain work like a switchboard and send messages forward. A marketing firm can use FMRI to determine which celebrities trigger certain images in consumers' minds. Students may use any example as long as it demonstrates the ability of the technique.

Pepsi A.M. was positioned as a coffee substitute. In one test market, Pepsi A.M. was introduced onto a university campus. It was both an immense hit and a total failure. The product always sold out of the vending machines, but the consumption of coffee stayed the same and the sale of other Pepsi products declined. In terms of levels of categorization, discuss what created the problem in the test market.

Pepsi A.M. and coffee on this campus did not occupy the same basic level. Coffee and tea were not seen as belonging to the same product category as cola drinks. Cola drinks came in a bottle and were sold from vending machines. Coffee drinks came in a cup and were less likely to come from a vending machine. The superordinate level of caffeinated drinks was not strong enough to create a successful product positioning strategy. The basic level category is typically the most useful in classifying products.

Define problem recognition. Show how problems can arise. Give a brief example to illustrate the problem recognition process.

Problem recognition occurs whenever the consumer sees a significant difference between his or her current state of affairs and some desired or ideal state. Problem recognition can occur in two ways: (a) there is a downward movement of the actual state (a person runs out of gas) or (b) there is an upward movement in the ideal state (such as a person craving something that he or she does not currently have, like a faster car).

What is an evoked set? What is a consideration set? Create examples to illustrate the terms.

The evoked set consists of all those product alternatives a consumer knows about, while the consideration set consists of all those products actively considered by the consumer during his or her choice process. Both sets can be composed of products already in memory (the retrieval set) as well as those prominently displayed in the retail environment

Purchase decisions that involve extensive search also entail some kind of perceived risk (a belief that the purchase potentially could have negative consequences). Name five perceived risks, indicate the kinds of consumers most vulnerable to each risk, and indicate the types of purchases most sensitive to each.

The five basic kinds of risk include both objective (e.g., physical danger) and subjective factors (e.g., social embarrassment). Consumers with greater "risk capital" are less affected by perceived risks associated with purchases. The five basic kinds of risk include: ∙ Monetary risk-Risk capital consists of money and property. Those with relatively little income and wealth are most vulnerable. Purchases most sensitive to it: high-ticket items that require a substantial expenditure such as cars and houses. ∙ Functional risk-Risk capital consists of alternate means of performing the function or meeting the need. Practical consumers are the most sensitive. Purchases most sensitive to it: products or services whose purchase and use requires the buyer's exclusive commitment and precludes redundancy. ∙ Physical risk-Risk capital consists of physical vigor, health, and vitality. Those who are elderly, frail, or in ill health are most vulnerable. Purchases sensitive to it: mechanical or electrical goods (such as vehicles, flammables), drugs and medical treatment, food and beverages. ∙ Social risk-Risk capital consists of self-esteem and confidence. Those who are insecure and uncertain are most sensitive. Purchases sensitive to it: socially visible or symbolic goods such as clothes, jewelry, cars, homes, or sports equipment. ∙ Psychological risk-Risk capital consists of affiliations and status. Those lacking respect or attractiveness to peers are most sensitive. Purchases sensitive to it: expensive personal luxuries that may engender guilt, durables, and services whose use demands self-discipline or sacrifice.

List and define the five stages of the cognitive decision-making process.

The five stages are problem recognition, information search, evaluation of alternatives, product choice, and outcomes. a. Problem recognition occurs whenever the consumer sees a significant difference between his or her current state of affairs and some desired or ideal state. b. Information search is the process by which the consumer surveys his or her environment for appropriate data to make a reasonable decision. c. Evaluation of alternatives-During this phase, the consumer evaluates the products in his or her consideration set. d. Product choice-A product is or is not chosen to solve the buyer's problem. e. Outcomes-If a product is selected, it will either be satisfactory or unsatisfactory. If no product is selected, the process may begin again at a future time.

Briefly describe and compare the three types of decision-making emphasized in the text.

The three types of decision-making emphasized in the text were: a. Cognitive -in this view, people calmly and carefully integrate as much information as possible with what they already know about a product, painstakingly weigh the pluses and minuses of each alternative, and arrive at a satisfactory decision. b. Habitual -this perspective is important when consumers have a low level of involvement. Marketers must concentrate on assessing the characteristics of the environment that influence members of a target market, such as the design of a retail outlet or whether a package is enticing. The environment has an effect on the decisions to be made. c. Affective -in these cases, the decision making is emotional and spontaneous

Define noncompensatory rules used in purchase decision-making. Describe the types of rules that fall under this category.

When consumers consider attributes of several product choices, they may follow a simple noncompensatory decision rule, meaning that they feel a product with a high standing on one attribute cannot "make up for" (or compensate for) poor performance on another. ∙ Noncompensatory decision rules-These decision rules are characterized by exclusion: low standing on one attribute cannot be ignored because of good performance on other attributes. Strong attributes do not compensate for weak ones. Kinds of rules include: ∙ Lexicographic rule-The brand that is best on the most important attribute is selected. In the event of a tie, brands are evaluated on the next most important attribute. ∙ Elimination-by-aspects rule-Brands are compared for the presence of the attribute considered most important. If that feature is not present, the alternative is rejected. ∙ Conjunctive rule-Minimum cutoffs are established for each attribute the brands possess. The brand must meet all cutoffs to be considered.