MARK 4100 Exam #2
Long-Term Self Interest
"I hate broccoli, but I want to be healthy for myself and my family!"
Short-Term Self-Interest
"I love donuts! But they are making me unhealthy"
Milgram Study
"teacher" administered what they thought were real shocks to a "learner" demonstrated the dangers of obedience to authority
Ghost Followers
- About 48 million of Twitter's reported active users are automated accounts designed to simulate real people - Facebook disclosed that it had at least twice as many fake users as it previously estimated Fake accounts can help sway advertising audiences and reshape political debates. They can defraud businesses and ruin reputations.
What does the decision-making approach acknowledges that...
- Consumers need to make choices among alternatives - There is often more than one alternative in the market - Consumers are always trying to choose alternatives they think are the best ones - A host of variables may influence their choices (time constraint, information availability, motivation/needs, affective states, environmental cues)
Weak Argument
- Designed for beauty - Floats in water with a minimum of rust - Comes in various sizes, shapes, and colors - Designed with the bathroom in mind - In direct comparison tests the EDGE blade gave no more nicks or cuts than its competition - Can only be used once but will be memorable
Emotions in Marketing
- Early consumer research focused more on cognitive models of how consumer make decisions and form attitudes - Researchers are recognizing that affective/emotional responses are generally more influential than cognitive responses in shaping consumer attitudes toward a product - Emotional Appeal - a message designed to elicit an emotional response
Pluses of Comparative Messaging
- Effective at generating attention and brand awareness - Can positively increase message processing, attitudes, intentions & behaviors - Messaging comparing two brands can induce more ELABORATION - Comparative messages particularly effective for NEW brands or low market share brands attempting to take sales away from more popular brands - Encourages consumers to differentiate between brands
Basic Emotions
- Ekman proposed emotions are discrete, measurable, and physiologically distinct. - Most influential finding that certain emotions appeared to be universally recognized across cultures and are not learned
Central Route Triggers: Motivation
- Razor Ad - Manipulate Motivation: High Motivation - soon available nearby Low Motivation- not available nearby Also manipulate: - Strong v. weak argument - celebrity v. non-celebrity endorser
Strong Argument for Razor
- Scientifically designed - New advanced honing method creates unsurpassed sharpness - Handle is tapered and ribbed to prevent slipping - In direct comparison tests the EDGE blade gave twice as many close shaves as its nearest competitors - Unique angle placement of the blade provides the smoothes shave possible
Multidimensional Approach to Emotions
- The emotional experiences are divided into two dimensions 1. valence - how negative or positive the experience feels 2. arousal - how energized or enervated the experience feels
Negatives of Comparative Advertising
- Typically are not seen as having high credibility - Comparative ads that refer to competitors in a negative way are perceived to be less believable and more biased
The Classical Economic Approach
- competition between people free to pursue their own economic self-interest will benefit society as a whole - the market is guided by an "invisible hand" - regulation best is left at minimum
How can we help givers?
- create a culture of help-seeking - avoid takers (matchers will follower social norms) - be aware of "fakers" (agreeable takers) - help givers create structure around when they help others
When are we most likely to rely on social proof?
- when we are peripheral processing (not thinking too hard) - when we are in an uncertain or ambiguous situation - when people similar to us are doing it
Types of Heuristics
1. Availability Heuristic 2. Representative Heuristic 3. Anchoring and Adjustment
Classification of Emotions
1. Basic Emotions 2. Multidimensional Approach
Types of Biases
1. Confirmation Bias 2. Overconfidence/Optimism Bias 3. Ostrich Bias
Aspects of the Source
1. Credibility 2. Attractiveness
How do consumers make judgments of satisfaction vs. dissatisfaction?
1. Expectancy Disconfirmation (expectations) 2. Attribution Theory (causality & blame)
Examples of Social Proof
1. Facebook Friends, Likes, Comments 2. Instagram Likes 3. Twitter Followers 4. Customer Reviews
Marketing Strategies Derived from Scarcity Principles
1. Limited Numbers - customers told that a particular product is in short supply 2. Time Limits - customer told that there is a deadline to the sale of a product
Examples of Optimism Bias
1. People believe that they are less at risk of being a crime victim 2. Smokers believe that they are less likely to contract lung cancer or disease than other smokers 3. First-time bungee jumpers believe that they are less at risk of an injury than other jumpers 4. Traders often think they are less exposed to losses in the markets
Confirmation Bias contributes to...
1. Polarization of Beliefs 2. Persistence of discredited beliefs (beliefs that are false) 3. Resistance to updating or changing beliefs 4. Overconfidence
What are the 5 stages of Decision-Making?
1. Problem Recognition 2. Information Search 3. Evaluation of Alternatives 4. Choice 5. Post-Purchase Evaluation
What predicts whether you like someone or not?
1. Proximity 2. Similarity 3. Attractiveness 4. Compliments 5. Cooperating towards shared goals 6. Person associate with other people you like
What are the 6 principles of persuasion?
1. Reciprocity 2. Scarcity 3. Authority 4. Commitment & Consistency 5. Liking 6. Social Proof
Why do we care about what happens after the sale?
1. Repeat purchases 2. Brand extensions 3. Brand reputation
How to Manage Consumer Expectations
1. Spell out clear definitive and simple messages to customers 2. Set expectations accurately 3. Communicate consistent messages 4. Mild incongruity is tolerable
Construction of Scarcity: Diamonds Example
1. The association between love and diamonds - American customers were sold the idea that even a man of modest means must give a diamond to his betrothed, just as kings and aristocrats had done in several examples cherry-picked from European folklore. 2. The quantity of diamonds is controlled (diamonds are not that rate) - The big gem companies aggressively control the supply that arrives at market, creating artificial scarcity and high prices.
How does disposal impact public policy concerns?
1. Too much trash in landfills - want to see things disposed of properly (to minimize landfill space and to make sure potentially hazardous chemicals, etc. are disposed of properly) 2. Products can do a lot of good besides sit in landfills if they go to right channels (charities) So, environmental and charitable concerns can your product be safely and sustainably disposed? impacts consumer perceptions and the enviornment
Marketing Implications: Framing Effects
93% lean vs. 7% fat There's no difference, it's the same exact thing. It just sounds better to say 93% lean, than 7% fat because we don't want to think about the fat, we want to avoid it.
How does reciprocity work?
A favor done for you --> Increases feeling of obligation --> Increases likelihood you do favor Even when not asked for or uninvited, favors often produce a powerful obligation to reciprocate an event greater favor in return.
Door-in-the-Face Technique
Ask big, get turned down, make concession, then ask small
What type of emotion model did Inside Out use?
Basic Emotion Model
How does Door-in-the-Face work?
Big ask to Little ask --> Increases Feeling of Obligation because it seems like the person did you a favor --> Increases Compliance
Reciprocity and Persuasion
By being the first to give, you can trigger the consumers' sense of obligation to return the favor. The rule of reciprocity has the power to trigger feelings of indebtedness even when faced with an uninvited favor and irrespective of liking the person who executed the favor. Often the receiver returns the original favor with an even larger act (e.g., free sample leading to purchase).
Central Route Processing
Central Route --> Audience is motivated & have ability --> Processing requires high effort, evaluated message --> Persuasion causes a lasting change in attitude
Analysis of the Super Bowl according to central & peripheral processing
Central: the proofs are not in anyway related to the Superbowl. The text is just a random excerpt, not an argument. Peripheral: Not actually processing the message. - "He looks like a smart person" - "He sure used a lot of complicated looking math" - "He has so many arguments!"
Was Elle Persuasive?: Central Processing
Clear arguments as to why her experience matches the requirements of Harvard - Public speaking - Group Deliberation & Decision Making - Good memory for details & use of vocabulary Concrete evidence of her competence - LSAT score - Leadership at sorority
Why does Foot-in-the-Door work?
Commitment to a Small Request --> Desire to be Consistent --> Commitment to Larger Request
Confirmation Bias and Brand Loyalty
Confirmation bias is one of the biggest drivers and often under reported influencers of brand loyalty. Can be stronger than the usual influencers such as product performance, emotional empathy, and brand recognition. A consumer who likes a particular brand and researches a new purchase may be motivated to seek out customer reviews on the internet that favor that brand.
Why is it important to study persuasion in the context of consumer behavior?
Consumers can be quite difficult to persuade (to change an attitude, to try something new, to buy a product, etc.) Persuasion is potentially the ESSENCE of marketing.
Manipulation Control vs. Social Proof Message
Control: HELP SAVE THE ENVIRONMENT Descriptive Social Norm: JOIN YOUR FELLOW GUESTS IN HELPING TO SAVE THE ENVIRONMENT
Elaboration Likelihood Mode (ELM)
Dual Process theory that describes how attitudes CHANGE Proposes two major routes to persuasion 1. Central: high effort 2. Peripheral: low effort
Nudge is based on the notion that the way out __________________ is structured plays a far larger role in determining out choices than our _________________ willpower.
ENVIRONMENT; INDIVIDUAL
Emotional Intelligence
Emotional Intelligence (EI or EQ) is the capability of individuals to 1. Perceive/recognize their own emotions 2. Perceive/recognize emotions in others 3. Understand/Discern between different feelings and label them appropriately 4. Use emotional information to guide thinking and behavior 5. Manage and/or adjust emotions to adapt to environments or achieve one's goal(s)
Step 3 & 4: Evaluation and Choice
Evaluation: consumers evaluate different products/brands on the basis of varying product attributes, and whether these can deliver the benefits that the customers are seeking Choice: purchase of product/service takes place
Biased Search for Information
Experiments have found repeatedly that people tend to test hypotheses in a one-sided way, by searching for evidence consistent with their current hypothesis
Locus Attribution
External? or Internal? Is the problem consumer or marketer related? If marketer related, then dissatisfied. If it's your fault that something broke, not as dissatisfied.
Foot-in-the- Door Phenomenon Diagram
Foot-in-the-Door --> Gain Compliance with a small request --> Make a related, larger request
Why does Homer Hate Ned Flanders?
Has Ned treated Homer badly? No! In fact, Ned has treated Homer a lot better than Homer has treated Ned. Homer is ENVIOUS of Ned!
Which stages of Decision-Making are subject to biases and heuristics?
Information Search, Evaluation of Alternatives, and Choice
Why do we have reciprocity?
It has been proposed that humans survived because our ancestors learned to share goods and services "in an honored network of obligation" - Facilitated the division of labor (each member of group performs service and receives a service in return)
Why is it important to study how consumers make decisions?
It is important to know how consumers seek information, evaluate the information, come to a choice, and behave AFTER the choice.
Central processing you actually take in the _______________, peripheral processing you look at cues __________________.
Message, Outside the message
Where do the used products go?
Need to understand flow of used goods to markets that depend on them 1. Second-hand markets (e-Bay, flea markets, etc.) 2. Self-storage 3. Charities
How does two-sided messaging persuade?
Negative Information --> Increase Source Credibility --> Increase Positive Attitudes Negative Information --> Increase Positive Attitudes Negative Information --> Reduce Counterarguments --> Increase Positive Attitudes
What are the two different perspectives in decision theory?
Normative & Descriptive
Step 2: Information Search
Once a consumer has decided that they need to purchase a product or service then they will begin to search for information surrounding the product. Two types of Search: I. Internal Search II. External Search
Why do we avoid negative, but important information?
Our brains are designed to shield us from uncomfortable information...
Liking
People are easily persuaded by other people that they like
The Completeness Heuristic
People are more likely to base what they think is "complete" off of the shape of something. So a sandwich that is cut in half might appear "smaller" and the person might end up eating more as opposed to a sandwich the same size that is "whole". They think they are eating a whole sandwich so they don't eat as much.
Commitment & Consistency
People have a general desire to appear consistent in their behavior. People thus tend to stuck with the decisions they make. When consumers make a commitment (even a small one), they are likely to feel an AUTOMATIC compulsion to continue a set of similar behaviors or actions in order to stay consistent.
Why is perceived scarcity so powerful?
Perceived Scarcity --> We equate availability with quality (less available = higher quantity) --> Increases Desirability of Object Perceived Scarcity --> Increases Desirability of Object Perceived Scarcity --> We fear missing out --> Increases Desirability of Object
Peripheral Route Processing
Peripheral Route --> Audience is NOT motivated & don't have ability --> Processing has low effort, cues outside of message --> Persuasion causes a temporary change in attitude
What is persuasion?
Persuasion is a method of changing a person's cognitions, feelings, behaviors, or general evaluations (attitudes) toward some object, issue, or person. Persuasion is trying to CHANGE the attitude.
Foot-in-the-Door Phenomenon
Persuasion technique of starting with a small request that is easy to agree on in order to gain acceptance to a much larger request later on.
Was Elle Persuasive?: Peripheral Processing
Positive Heuristic/Bias - Attractive looking - Wearing a variety of attractive outfits (bikinis, bright colors, etc) Negative Heuristic/Bias: - "Lawyers don't study fashion" - "She doesn't look like a lawyer"
Pluses and Minuses of Social Proof as Guide to Behavior
Positives: - Saves mental resources - Wisdom of the crowds can be accurate Negatives: - Decisions of even larger groups of individuals may be grounded in very little information - Groupthink
Why do we feel compelled to return a favor?
Reciprocity creates less of a warm, fuzzy feeling and more of a feeling of DEBT, that the receiver wants to "pay back".
How does reciprocity apply to consumer behavior?
Reciprocity is the psychological mechanism behind the "Give before you get" strategy.
Overconfidence
Refers to the phenomenon that people's confidence in their judgements and knowledge is higher than the accuracy of these judgements Measures the difference between what people really know and what they think they know. EX: We tend to think we are "better-than-average"
Real People Ad Backlash
Some people said that the people were too "real" and kind of cringe worthy
Reciprocity and the Coca-Cola Experiment
There was a participant looking at a painting and an experimenter being either polite or rude on the phone. Then after, the experimenter offered the participant a coca cola. Then they asked the participant if they wanted to purchase a raffle ticket. The result: The power of reciprocity outweighed the initial dislike. We feel compelled to return a favor.
More Modern Take on Emotion vs. Reason
Traditionally, in the history of Western thought, the prevailing view has been that emotions are enemies of rationality and disruptive forces to be mastered and overcome. But in reality, emotions guide our perceptions of the world, our memories of the past and even our moral judgments of right and wrong, most typically in ways that enable effective responses to the current situation Research suggests that emotion is an important component of rational decision-making, not a crutch, a shortcoming, or some kind of weakness (Pham, 2007). Emotions organize — rather than disrupt — rational thinking
What is over and undervalued in confirmation bias?
Undervalued: all the facts about an issue, product, brand, etc. Overvalued: Information that supports your beliefs
Celebrity vs. Non-Celebrity Endorser (High Motivation)
When consumers are high involvement, central cues (strong vs. weak argument) influence attitudes
Celebrity vs. Non-Celebrity Endorser (Low Motivation)
When consumers are low involvement, peripheral cues (celeb vs. not) influence attitudes
Disposal of Goods
Why is the product being thrown away? - Need to understand reasons for products' replacement 1. Is it being replaced because it is faulty? 2. Marketers may want to shape product lifespan
Opt-In vs. Opt-Out Organ Donation
You have to opt-in to organ donation, thus the default is opt-out. You have to opt-out of organ donation, thus the default is opt-in.
Availability and Vividness
Your odds from dying due to a fall from a bed or piece of furniture are 1 in 4,238 compared to about 1 in 3,748,067 for a shark attack
Two-Sided Message
a marketing message that presents both positive and negative information - Tends to be better from consumers who have unfavorable attitudes toward the product - Better from high motivation consumers
One-Sided Message
a marketing message that presents only positive information - tends to be better for consumers who are already favorable towards product/brand - Better for low motivation consumers
The Availability Heuristic
a mental shortcut that relies on immediate examples that come to a given person's mind when evaluating a specific topic, concept, method or decision. if something is easier to remember, it must be more likely to occur than something that is harder to remember. if something is easier to remember, it must be more important than something harder to remember.
Comparative Message
a message that makes direct comparisons with competitors
Packrat
a person who keeps things and has difficulty paring with them
Purger/Minimalist
a person who takes stock in whether things are needed, and if not, is typically willing to dispose of them.
Envy
a social emotion that occurs when a person lacks another's superior quality, achievement, or possession and either desires it or wishes that the other lacked it
Reciprocity
a social norm of responding to a positive action with another positive action, rewarding kind actions - People tend to return favors - You scratch my back, I scratch yours - The golden rule
Attractiveness
a source characteristic that evokes favorable attitudes if a source is physically attractive, likable, familiar, or similar to ourselves
Direct Comparative Message
advertisers explicitly name and attack a competitor or set of competitors on the basis of an attribute or benefit
Gratitude
an emotion expressing appreciation for what one has It can motivate people to make positive changes in their lives and feel more kind and compassionate toward to world at large. studies show that people can deliberately cultivate gratitude by literally counting their blessings and writing letters of thanks. this proactive acknowledgement can increase well-being, health, and happiness
Givers
are others-focused, and tend to provide support to others with no strings attached. They ask themselves, "How can I add value for this person? What can I contribute?"
Evaluations
are valenced (i.e., positive or negative) reactions to events and objects, that are not accompanied by a high level of arousal e.g., I feel positively towards Cheerios.
Nudge Theory
based as it is on the simple premise that people will often choose what is easiest over what is wisest. subtle policy shift that encourages people to make decisions that are in their broad self-interest. it's about making it easier for them to make a certain decision.
What is envy the result of?
comparing yourself to others
Central Route
consists of thoughtful consideration of the arguments (ideas, content) of the message. Consumer is being an active participant in the process of persuasion. Consumer must have: - Motivation to process the message (if the consumer doesn't care, they will not centrally process) - Ability to think about the message (if the consumer is distracted or has trouble understanding the message, they will lack the ability to do central processing)
Why study emotions?
emotions are complex they are intertwined with mood, personality, disposition, cognition, motivation, physiology
Attribution Theory
examines how individuals explain the causes of behavior and events. it is important to understand how consumers will attribute the cause of why a product or service fails to meet their expectations. who will be blamed? Three factors: 1. Stability 2. Locus 3. Controllability
Descriptive Decision Theory
focus is on describing how people make decisions. - primarily used by psychologists - what processes are involved in our actual decisions "I sometimes try to choose the objectively correct choice with limited information (I use biases and heuristics)"
Normative Decision Theory
focus is on finding rules that lead to the "best" decision in a given situation. how SHOULD consumers choose? - Primarily used by economists - Assumes people are Rational - What is the best alternative "I choose the objectively correct choice with full information"
Emotions
in contrast to moods, tend to be more intense and are often related to a specific triggering event sometimes called "discrete emotions"
Moods
involve temporary positive or negative affective states accompanied by moderate levels of arousal. moods tend to be diffuse and are not necessarily linked to particular affect-arousing event e.g., I am just in a bad mood today
Benign Envy
involves greater focus on the object of your envy and how your might achieve it for yourself.
Stability Attribution
is the cause of the event temporary or permanent? if it's permanent, more likely to lead to dissatisfaction. (if other consumers have had the same problem, not a chance occurrence that just happened to happen to you - if it were chance - temporary - you'd be more forgiving)
External Search
is the process of collecting information from sources other than from the consumer's own memory and experiences (e.g., word of mouth, internet, stores, etc.)
Matchers
like to preserve an equal balance of giving and taking. their mindset is: "if you take from me, i'll take from you. If you give to me, i'll give to you."
Nudge Solution
making the default option the healthier and more financially sound option while leaving the alternative less healthy and less financially sound option available. thus, not taking away the freedom to make the other choice.
Why is envy relevant to consumer behavior?
marketing tends to facilitate upward social comparisons - Am I beautiful enough? - Am I clever enough? - Am I efficient enough? - Am I rich enough?
Peripheral Route
occurs when the listener decides whether to agree with the message based on other cues besides the strength of the arguments or ideas in the message Consumer is being a passive participant in the process of persuasion. Consumer has LOW motivation to process the message & LOW ability to think about the message. Relies on biases, heuristics, stereotypes to make assessments. EX: A listener may decide to agree with a message because the source appears to be an expert, or is attractive. EX: A listener is persuaded because he or she notices that a message has many arguments-- but lacks the ability or motivation to think about them individually.
Step I: Problem Recognition
occurs whenever the consumer sees a significant difference between his or her actual state and some desired or ideal state - Analogous to need recognition - This disconnection between actual vs. ideal motivates consumer to action
Indirect Comparative Message
offering is compared with those of unnamed competitors
Scarcity
people attach more value to things that are FEW in quantity
Prospect Theory
people choose to take on risk when evaluating potential losses and avoid risks when evaluating potential gains
Loss Aversion
people tend to be more sensitive to losses than to gains loss of $10 hurts more than getting a gain of $10 would feel good
Fundamental Attribution Error
people tend to weight an agent's internal characteristics (character or intention), rather than external factors, in explaining the agent's behavior we tend to overweight the internal causes for others' behavior
Who do we tend to compare ourselves to?
people who are similar to us - small differences can make a BIG difference
Authority
people will tend to obey authority figures or follow those that look like they know what they are doing can be based off cues like how a person looks & what they are wearing (uniform)
Schadenfreude
pleasure derived by someone from another person's misfortune
Word-of-Mouth Communication
product information transmitted by individuals to individuals - particularly powerful when we are unfamiliar with product category - people believe in their family and friends more even if they aren't experts we weight negative WOM more heavily than we do positive comments. - negative WOM is easy to spread, especially online. rumors are a big form of this.
The Rule of Three:
reciprocate with a gift three-times the value of the gift in February- Gift Giving in South Korea
Internal Search
refers to a consumer's memory or recollection of a product, oftentimes triggered or guided by personal experience
What is negative reciprocity?
revenge
Heuristics
rules of thumb; mental shortcuts that avoid heavy thinking
Representativeness Heuristic
seen when people use categories to make judgments (particularly that of likelihood or probability) an individual thing has a high representativeness for a category if it is very similar to a prototype of that category. analogous to stereotyping. this heuristic involves attending to the particular characteristics of the individual, ignoring how common those categories are in the population (called the base rates).
Takers
self-focused and put their own interests ahead of others' needs they try to gain as much as possible from their interactions while contributing as little as they can in return.
Social Comparison Theory
suggests that people have an innate drive to evaluate themselves, often in comparison to others. Festinger believed that we engage in this comparison process as a way of establishing a benchmark by which we can make accurate evaluations of ourselves.
Critics of Nudge
the concept has been criticized as paternalistic and manipulative because you are imposing values onto people in a subtle way that they may night be aware of
Credibility
the extent to which the source is trustworthy, expert, or has status
Post-Purchase Evaluation
the final stage of consumer decision making when the consumer assesses whether they are satisfied or dissatisfied with a purchase. This also involves how consumers dispose of products.
Groupthink
the practice of thinking or making decisions as a group in a way that discourages creativity or individual responsibility.
Scarce Cookie Study
the same exact cookie was rated as more desirable & valuable in the 2 cookie jar than when it came from the 10 cookie jar
Optimism Bias
the tendency for a person to believe that they are at a lesser risk of experiencing a negative event compared to others.
Confirmation Bias
the tendency to search for, interpret, favor, and recall information in a way that confirms one's preexisting thinking and beliefs - Gather information selectively (only search for either positive or negative info) - Interpret information in a biased way (skewed to fit current beliefs) - Remember information in a biased way
Social Proof
the tendency to see an action as more acceptable or appropriate when others are doing it. people tend to trust things that are thought to be popular - "herd behavior" (a type of conformity) - an automatic reaction, which can leave us vulnerable
Expectation Disconfirmation Model
this is the central idea to customer satisfaction. compares product expectations (how we think a product/service will perform) with how it actually performs once we have it. Satisfaction = actual performance - product expectations. When actual falls short of expectations, we are dissatisfied. When actual is equal to expected, we are satisfied. When actual is above expectations, we are delighted. Actual performance is SUBJECTIVE performance, how consumers think the product actually performs is not OBJECTIVE. What matters is perception, not reality.
What do we do when we don't like to admit to envy?
we can even transform our feelings of envy into feelings of righteous indignation/injustice
Ostrich Effect
we tend to ignore or avoid negative and risky information and situations. We "bury our heads in the sand" EX: Investors have been found to be less likely to monitor their investments during bad markets.
Upward Social Comparison
when we compare ourselves with those who we believe are better than us. - These upward comparisons often focus on the desire to improve our current level of ability
Downward Social Comparison
when we compare themselves to others who are worse off than ourselves. - Such downward comparisons are often centered on making ourselves feel better about our abilities
Malicious Envy
your focus is on the person and wishing they didn't have the advantage you covet Malicious envy tends to lead to schadenfreude