Consumer Behavior Final

Question 1

Cognitive Dissonance

Answer 1

Desire for consistency between attitudes and behavior

• Inconsistency = Discomfort
• Motivated to reduce discomfort

Question 2

Elaboration Likelihood Model: Central Route

Answer 2

Requires high motivation, ability, and opportunity

More likely for high-involvement consumers

Relevant information matters
◦ Facts, Evidence
◦ Logic, Reasoning
◦ Examples

Question 3

Elaboration Likelihood Model: Peripheral Route

Answer 3

Requires less motivation, ability, or opportunity

More likely for low-involvement consumers

Easy-to-process information matters
◦ Message length, number of features
◦ Positive emotions
◦ Attractive / likeable source

Question 4

Heider’s Balance Theory

Answer 4

People dislike unbalanced attitudes and will work to balance them.

To be balanced, there needs to be three positives, or two negatives and one positive

Question 5

Swagger Wagon

Answer 5

Rap song by Toyota that was meant to depict minivans as cool and interesting

Question 6

Who was deemed the father of modern advertising?

Answer 6

“We nominate Pavlov as the father of modern advertising… He took a
neutral object and, by associating it with a meaningful object… he gave
it added value. That is what we try to do in modern advertising.”

Question 7

What is classical conditioning useful for?

Answer 7

1. Linking products to desired responses
2. Inducing general emotional responses

Question 8

Three types of operant conditioning

Answer 8

Positive reinforcement: when consumer engages in behavior,
something good happens (e.g., loyalty programs).

Negative reinforcement: when consumer engages in behavior,
something bad stops happening (e.g., annoying sound inside car
stops when seatbelt is fastened).

§Punishment: when consumer engages in behavior, something bad
happens (e.g., eat expired food, get sick).

Question 8

Operant Conditioning

Answer 8

Altering the probability of behavior by changing the consequences of the behavior

Question 9

Vicarious Learning

Answer 9

When consumers watch the actions of
others and note the reinforcements they receive for their
behaviors

Question 10

Attitude

Answer 10

An attitude is an overall evaluation that expresses how much we
like or dislike an issue, person, or object

Question 11

5 characteristics of attitude

Answer 11

Favorability
Confidence
Resistance
Accessibility
Persistence

Question 12

Implicit knowledge

Answer 12

Cognitive associations a consumer holds
between 2 constructs that exist outside his/her conscious
awareness

Question 13

Subliminal Advertising Study - Vicary, 1957

Answer 13

• James Vicary’s study in New Jersey movie theater in 1957
• 2 messages flashed during playing of film: “Drink Coca-Cola” and “Hungry?
  Eat Popcorn”
  ◦ Flash every five seconds
  ◦ Duration of flashes: 1/3000th of a second
• Dramatic results were reported:
  ◦ 18.1% increase in Coca-Cola sales
  ◦ 57.8% jump in popcorn purchases

ALL FAKE RESULTS

Question 14

Priming

Answer 14

Priming- Simply thinking about a concept activates related concepts in memory

Influences subsequent attitudes and behavior

Question 15

Implicit Association Test (IAT)

Answer 15

Implicit attitudes can exist and be measured

Defines attitudes as the association between attitude object and good/bad

Question 16

IAT Process

Answer 16

1. 2 attitude objects are pitted against each other: AO1 and AO2
2. Measure reaction times (in ms) to see how quickly people can pair AO1 with good versus bad words, versus AO2 with good versus bad words
3. If quicker to pair AO1 with good items and AO2 with bad items, then implicit preference for AO1

Question 17

When is IAT useful?

Answer 17

1. If the consumer has no introspective access to their attitude toward a brand
2. If consumer prefers not to report or admit to their attitude
   toward brand

Question 18

Attitudes are more likely to predict
behavior when…

Answer 18

◦ Consumers think deliberatively/ explain reasons for their attitude
◦ They are more accessible
◦ When they are specific

Question 19

Prospect Theory

Answer 19

People see the world in terms of changes from reference points, where the marginal pain of losing is worse than the marginal pleasure of gaining

Question 20

Replication Crisis

Answer 20

Many psychological studies have been found to be difficult to
replicate due to:

1. bad methods
2. fraud
3. p-hacking

Question 21

P-value

Answer 21

In statistics, the p-value is the probability of obtaining results as extreme as the
observed results of a statistical hypothesis test, assuming that the null hypothesis is
correct.

A smaller p-value means that there is stronger evidence in favor of the alternative hypothesis; p < .05 statistical significant

Question 22

How to avoid p-hacking

Answer 22

• Decide your statistical parameters early, and report any changes.
• Decide when to stop collecting data and what composes an outlier
  beforehand.

Question 23

Decision-Making Process

Answer 23

1) Problem recognition:
Perceiving need
2) Information search:
Seeking value
3) Alternative evaluation:
Assessing value
4) Purchase decision:
Buying value and heuristics
5) Post-purchase behavior:
Value in consumption

Question 24

Decision-Making Models

Answer 24

Compensatory 1. Additive 2. Weighted Additive 3. Additive Difference Non-compensatory 1. Conjunctive 2. Disjunctive 3. Lexicographic 4. Elimination by Aspect

Question 25

Weighted-additive multi-attribute model

Answer 25

Attitude toward brand b = sum of (importance of attribute * the consumer’s subjective assessment of the quality of b) Ab = sum(Ii * Bi)

Question 26

Additive Difference Model

Answer 26

Consumers sometimes make choices by making a series of pairwise comparisons, as in a tournament These comparisons can weighted (i.e., different importance weights are assigned to different attributes) or unweighted Unweighted: iPad vs Samsung Screen 0 - 2 = -2 Price 2 - 2 = 0 Ram -1 - 2 = -3 Total = -5, Samsung (on right) wins

Question 27

Determining weights in additive difference model

Answer 27

Conjoint analysis: Infer importance by observing how peoples’ preferences for products change as attribute values are changed

Question 28

Courtyard Marriott Conjoint Example

Answer 28

Designed for business travelers. Determined building shape, number of rooms, pool shape, and landscaping based on conjoint analysis. didn't listen to pool suggestions though.

Question 29

Stages of consideration and when to use different decision making models

Answer 29

1. Initial Consideration Set Use: Non-Compensatory 2. Reduced Consideration Set Use: Non-Compensatory and/or Compensatory 3. Choice *essentially cannot use compensatory on large sets of data

Question 30

Non-compensatory rules that compare across brands

Answer 30

1. Conjunctive 2. Disjunctive 3. Lexicographic 4. Elimination by Aspect

Question 31

Conjunctive Rule

Answer 31

- Options are eliminated if they are not above some threshold on ALL of a set of important attributes; Sometime called a “satisficing rule”—an option doesn’t have to be the best on any or all attributes---just above threshold on all “Get rid of the bad ones”

Question 32

Disjunctive Rule

Answer 32

- Similar to conjunctive - Consumer sets acceptable levels for the cutoffs—levels that are more desirable - Choose options that meet acceptable levels for many attributes - “Find the good ones” Example: evaluate whether each brand scores 3 or higher on all ALL attributes to be the most liked option; circle options that score 3 or higher on all attributes

Question 33

Lexicographic Rule

Answer 33

Choosing the option that is the best on the most important attribute

Question 34

Elimination by Aspect Rule

Answer 34

Similar to lexicographic but incorporates the notion of an acceptable cutoff *example: no category can have a score lower than 3. go in order of importance with this in mind then have one left

Question 35

Anchoring

Answer 35

When asked to form an inference about an uncertain quantity, we start with an initial impression and update *can be arbitrary

Question 36

Anchoring Example: Gandhi

Answer 36

Two groups asked the same second question about how long Gandhi lived, but their first question varied. Group 1 was asked if he lived past 140, while Group 2 was asked if he lived past age 9. Group 1 average aged lived guess: 67 Group 2 average: 50

Question 37

Decoy Effect

Answer 37

Consumers will have a specific change in preferences between two options when presented with a 3rd option that is asymmetrically dominated. *Economist example for print only vs. print and web

Question 38

Compromise Effect

Answer 38

More people choose option B in the 3-option set than in the 2-option set *TV example. Most expensive one is too "expensive or high quality" while lowest quality one is too cheap. Compromise on the middle option.

Question 39

What other factors influence our decisions?

Answer 39

1. Default Effect 2. Framing Effects 3. Endowment Effect 4. Mental Accounting

Question 40

Default Bias

Answer 40

Default: a preselected option adopted when no alternative is specified by the user or program Takes advantage of laziness and implied recommendation ”Standard” Default is you are not an organ donor unless you register to be one. By making the default be an organ donor, it greatly increases organ donor rates.

Question 41

Framing Effects

Answer 41

Labeling ground beef as "75% lean" or "25% fat". Taste Rating: 5.33 to 3.66 Quality Rating: 5.15 to 2.83 Leanness Rating: 4.49 to 2.96

Question 42

Mental Accounting

Answer 42

how we categorize our money influences our choices we put money aside for certain purposes and it is often not rational when plans shift.

Question 42

Endowment Effect

Answer 42

We value something more when we own it. Study of the college class with the Cornell mugs.

Question 43

Endowment Effect Examples in Marketing

Answer 43

- Free Month of HBO or other subscription - Buick 24 hours of Happiness Test Drive -

Question 44

How does low effort decision making differ from high effort decision making?

Answer 44

Limited resources and mental shortcuts: - We have limited cognitive resources and we deploy them selectively - This leads to the use of heuristics

Question 45

Heuristic

Answer 45

a decision shortcut or “rule of thumb”

Question 46

When are we most likely to use heuristics?

Answer 46

- Low involvement decisions - Low Motivation - When cognitive resources are constrained (time/pressure)

Question 47

What are four Purchase Point Heuristics

Answer 47

1. Brand Loyalty 2. Brand Familiarity 3. Scarcity = desirability 4. High Price = Quality

Question 48

Base rate neglect

Answer 48

Tendency to base judgments on events that are easy to recall rather than base rate information *Base rate information: how often an event really occurs

Question 49

Availability Heuristic

Answer 49

Frequency or likelihood = How quickly examples come to mind

Question 50

Marketing Ideas with the Availability Heuristic

Answer 50

1. Provide positive and vivid product-related experiences ◦ Example: consumer testimonials 2. Encourage consumers to imagine positive product experiences 3. Stimulate positive word-of-mouth

Question 51

Representativeness Heuristic

Answer 51

Making predictions based on perceived similarities between a specific target and a general category

Question 52

How can companies take advantage of the representativeness heuristic?

Answer 52

Private label brands can appear representative of national brands with similar packaging

Question 53

Customer Satisfaction Facts

Answer 53

- Takes 12 positive experiences to outweigh 1 negative experience (on average) - Customer satisfaction is a good predictor of customer behavior

Question 54

How Does Post-Purchase Satisfaction Affect Consumer Behavior?

Answer 54

Consumer Satisfaction ◦ Repeat Purchase ◦ Positive Word-of-Mouth Consumer Dissatisfaction ◦ Switching Behavior ◦ Negative Word-of- Mouth ◦ Complaints ◦ Returns

Question 55

Expectancy Disconfirmation

Answer 55

Some define satisfaction in terms of expectancies: “An evaluation rendered that the consumption experience is at least as good as it was supposed to be.”

Question 56

Attribution Theory

Answer 56

1. Explanations of causes of (unfavorable) outcomes affect satisfaction/dissatisfaction 2. FAE 3. Dissatisfaction with the firm increases when consumers attribute product failure to factors under the firm’s control

Question 57

Ways to Measure Consumer Satisfaction

Answer 57

1. Likert Scale 2. Net Promoter Score On a 0-10 scale, how likely is it that you would recommend us to a friend or colleague? What is the primary reason for your score? Promoters: people who respond with a 9 or 10 Passives: people who respond with 7 or 8 Detractors: ratings less than 6 % of Promoters - % of Detractors = NPS

Question 58

Developing the loyalty loop

Answer 58

Goal: develop a deep commitment by consumers toward a brand so that with each trigger there is an automated decision to repeat-buy *Theories of loyalty often draw on metaphors: ◦ Economic exchange ◦ Human relationships

Question 59

The Economic Metaphor: Social Exchange Theory

Answer 59

People evaluate a transaction according to the rewards and costs Economic Model: Subtract costs from rewards. ◦ Compare to expectations People seek out reliable partners where the exchange is equitable Key: Fairness

Question 60

How to induce loyalty when there is no “love”?

Answer 60

1. Discounts ◦ Supermarkets 2. Punch Cards ◦ Coffee shops, Carwashes 3. Cumulative Points ◦ Airline FF, Hilton HHonors 4. Targeted Offers ◦ CVS

Question 61

Sit-up Example

Answer 61

Charles and David typically do 25 sit-ups. Charles sets a goal of 30 sit-ups. ◦ He finds himself very tired after 28 sit-ups and, at most, has the energy for 1 more. David sets a goal of 40 sit-ups. ◦ He finds himself very tired after 28 sit-ups and, at most, has the energy for 1 more. Charles will work harder to achieve his goal.

Question 62

Car Wash Study

Answer 62

- 300 loyalty cards distributed - All required 8 purchases to get a free wash - One started with 8 empty slots - The second started with two of ten slots filled Redemption rate within next 3 months was 19% vs. 34% *achieved the reward in almost half the time *Giving people a “head start” helps

Question 63

Four types of customers

Answer 63

1. Strangers 2. Butterflies 3. Barnacles 4. True Friends

Question 64

Strangers

Answer 64

Low loyalty and Low profitability

Question 65

Butterflies

Answer 65

Low Loyalty but High Profitability

Question 66

Barnacles

Answer 66

High Loyalty but Low Profitability

Question 67

True Friends

Answer 67

High Loyalty and High Profitability

Question 68

Informational Influence

Answer 68

We change our attitudes and behavior because of information gained from others ◦ This is one type of conformity: the act of changing your behavior in order to be more similar to those around you and what they are doing.

Question 69

Normative Influence

Answer 69

We act in ways that are consistent with group norms because of the implicit reward and punishments controlled by the group

Question 70

Asch Study

Answer 70

Identify which line is longer (100% accuracy when lines judged privately): *A is obviously longer ‘Subject’ 1: identifies B ‘Subject’ 2: identifies B Question: What percentage of people then identify B as longer?

Question 71

Reference Groups

Answer 71

Associative ◦ Groups to which we currently belong Aspirational ◦ Groups we admire and desire to be like Dissociative ◦ Groups we do not want to emulate

Question 72

The Spotlight Effect

Answer 72

Others have a big effect because we (wrongly) believe that they really notice us and care

Question 73

What features lead to more views on a video?

Answer 73

1. Surprises 2. Emotionality 3. Simplicity 4. Credibility 5. Story arcs

Question 74

What makes videos more likely to be shared?

Answer 74

Content and ideas that are shared also tend to have: 1. Triggers ◦ Things that spark the urge to share 2. Active emotionality ◦ Evoke emotions that trigger urges to take action 3. Social capital ◦ We share what makes us look good or cool *Hump day video being shared on Wednesdays

Question 75

Model of Consumer Behavior

Answer 75

1. 4 Ps: Product, Price, Place, Promotion 2. MARKETING 3. BLACK BOX OF THE CONSUMER 4. RESPONSE

Question 76

The Customer Journey

Answer 76

1. Initial Consideration Set 2. Active Evaluation; Information Gathering, Shopping 3. Moment of Purchase 4. Post-Purchase Experience Loyalty Loop: 3. Moment of Purchase 4. Post-Purchase Experience 5. Trigger 6. Re-Purchase

Question 77

American Marketing Association: Ethical Principles

Answer 77

Do no harm. This means consciously avoiding harmful actions or omissions by embodying high ethical standards and adhering to all applicable laws and regulations in the choices we make. Foster trust in the marketing system. Avoid deception in product design, pricing, communication, and delivery of distribution. Embrace ethical values. Affirm these core values: honesty, responsibility, fairness, respect, transparency and citizenship.

Question 78

Marketing ethics and laws timeline

Answer 78

Early 1900s: very few consumer protections 1930s: perfectly fine to imply cigarettes are doctor-endorsed 1960s: Consumer Bill of Rights was passed Consumer rights expanded in 1980s

Question 79

Consumer Bill of Rights

Answer 79

Includes the buyer’s rights: ◦ To safety ◦ To choose ◦ To be informed ◦ To be heard

Question 80

Sellers' Rights

Answer 80

1. To introduce products of different styles and sizes, provided they are not hazardous 2. To set its own prices, provided no discrimination occurs 3. To spend to promote the product 4. To use any product message, provided it is not misleading 5. To use buying incentives

Question 81

Consumers' Rights

Answer 81

1. To choose 2. To be informed 3. To safety 4. To be heard 5. To redress 6. To consumer education 7. To participate in marketplace decision-making 8. To have access to basic services 9. To a sustainable environment

Question 82

What’s “ethical” is usually ill-defined

Answer 82

Is it “fair” to exaggerate the appeal of food in ads? Is it "fair" to use decoy pricing to manipulate customers? etc.