Chapter 7 Flashcards
(29 cards)
Fast vs. Slow Processing
This analyzes how people make decisions. Do they take a long time? Quickly? Is it because we’re lazy or is that we don’t find the decision important?
What are the steps to a Rational Decision (thinking slow)?
- Problem Recognition
- Information Search
- Evaluation of Alternatives
- Product Choice
- Post-Purchase Evaluation
What is Problem Recognition?
Occurs when a consumer sees a difference between their current state and ideal state. It can go up or down. The two types are Need recognition which is when your actual state declines. Opportunity recognition is when you can imagine a better future (often set by the marketer)
EX: Need Recognition: Your phone breaks → You need a new one.
Opportunity Recognition: You see an ad for the latest iPhone with cool features → You want to upgrade, even though your current phone works fine.
What is Information Search?
The process by which we survey the environment for appropriate data to make a reasonable decision. Often through word of mouth, searching through comments.
EX: I want to buy headphones so I survey my friends, Google reviews, and compare deals before making a decision.
What is Evaluation of Alternatives?
Creating your sets:
Evoked/Awareness Set = brands you’ve heard of
Consideration Set = brands you are aware f and would consider purchasing
Inept Set = brands you dislike and wouldn’t consider buying
Inert Set = brands you know about but have no attitude towards
What is Evaluative Criteria?
Dimensions we use to judge the merits of competing options. There is wide latitude = you’re flexible and narrow latitude = you are picky.
EX: Pizza - attributes include price, location, diverse toppings, vegan
What is the Compensatory Rule?
This rule allows a product to make up for its shortcomings on one dimension by excelling on another (aka you compensate or compromise on an attribute).
What is the Weighted Additive Rule (under Compensatory)?
Allows consumers to take into account the relative importance of each attribute by weighting each one because oftentimes there may be many attributes but not all of them are equal.
EX: Costco pizza might not taste amazing (low score), but it’s super cheap (highly weighted), so overall it still ranks well.
What is the Simple Additive rule (also under Compensatory)?
This leads to the option with the LARGEST number of positive attributes. It’s common when we aren’t able to get a lot of info, and some of the attributes may not be personal to our needs as a consumer.
EX: Marty will buy a TV. Under this rule, she picks the TV that does the most stuff. This is the reason why household appliances have SO many features.
What are the additive moels not the best predictor of consumer decisions?
Even if it is the most rational, a lot of the decisions we make have other people in mind, not just based non personal pros and cons.
What is the Noncompensatory Rule?
This is where you WILL NOT compensate. The attribute has to be there. Usually when you make habitual or emotional decisions.
What is the Lexicographic Rule (under Noncompensatory)?
Consumer select the brand that is the best on the most important attribute.
EX: If a traveler prioritizes location, they might choose a hotel closer to the beach, even if it has slightly fewer amenities. If they value price, they will choose the cheapest option even if it’s farther (ONE ATTRIBUTE).
What is the Elimination by Aspects Rule (Noncompensatory)?
The choice must have a specific feature to be chosen. Setting minimum requirements for each aspect.
EX: You first compare hotels based on classification, eliminating all hotels with fewer than three stars. The set is reduced further by walking distance from the beach, reviews, etc, until only one option remains!
What is the Conjunctive Rule (Noncompensatory)?
Entails processing by brand. All the attributes have to be present to be evaluated.
EX: Looking for an apartment –> 2 bedroom, dishwasher, walking distance from classes, less than $1100. The one that wins is the one with the highest numerical value (ALL ATTRIBUTES).
What is Product Choice?
This is the fourth stage in the Rational Decision-making process and is where the consumer selects the product.
What is Feature Creep?
When companies overwhelm us with more and more features, that leads us into a spiral because it is harder to make a choice.
EX: Smartphones continue to have more and more features (face ID, Siri, etc.) and that makes it hard to choose.
What is Post-Purchase Evaluation?
This is the 5th step and is where consumers assess their satisfaction.
Feedback loops provide info to consumers in real time.
EX: When you buy an Apple Watch, you check reviews or performance updates, helping you decide if you made a good choice or not.
What is Social Scoring?
It is a 2-way evaluation where both customers and service providers increasingly rate one another’s performance!
EX: On platforms like Uber or Airbnb, customers rate drivers or hosts based on their experience (i.e. friendliness, cleanliness, timeliness), and at the same time, drivers or hosts rate customers (i.e. behavior, punctuality, and communication).
Describe the relationship between the Amount of Info Search and Product Knowledge.
High Knowledge Low Amount of Search = consumer already knows enough to make a decision
EX: Tech enthusiast who is already up to date on the latest specs doesn’t really need to do info search.
Low Knowledge Low Search = consumer doesn’t care as much to engage in info search.
EX: Buying a vacuum. Low interest.
Middle Ground = consumer has high enough interest in the product but as much knowledge, so they conduct an info search.
EX: purchasing a car
What is Habitual Decision Making?
Describes the choices we make with little or no conscious effort. It may look like brand loyalty but it might just be out of habit. If so, that brand/retailer is vulnerable because the customer could switch if something better comes along.
EX: Automatically grab Crest toothpaste because it’s familiar but if another brand came along and it is a better deal, you would switch.
Why do we make decisions out of habit/fast thinking?
Because of INERTIA! It involves less effort to throw a familiar package into the cart, and it’s risk-free.
What is Brand Loyalty?
Pattern of repeat purchasing behavior that involves a conscious decision to continue buying the same brand aka “my way or the highway”.
EX: I always buy Apple products because I like their products, branding, and user experience. It’s “my brand”.
What are Heuristics?
Mental shortcuts or “rules of thumb” that help us make decisions quickly without much thought. These can be general (e.g., “higher price means higher quality”) or specific (e.g., “I’ll buy Califia oat milk because that’s the brand my mom always uses”)
It can simplify decisions but may lead to uninformed choices.
What is meant by “mental accounting”?
The way we think and use money depends on all kinds of subjective factors (i.e. how we earned it, form it’s in). We put it in separate mental categories.
EX: I am more likely to purchase more Starbucks if I can use my dining money because it isn’t “real money”.
