lecture2-consumerDM Flashcards
(20 cards)
Why is understanding consumers challenging?
Consumer thought processes are unobservable, preferences are difficult to observe directly, and needs may be unarticulated or limited by technology.
What are the stages of consumer decision-making?
- Need Recognition 2. Information Search 3. Compare Alternatives 4. Purchase 5. Post-Purchase Evaluation
What initiates the buying process?
The buying process starts with need recognition, which can be triggered by internal stimuli (e.g., hunger) or external stimuli (e.g., advertisements).
What is Maslow’s Hierarchy of Needs?
A motivational theory that categorizes human needs into five levels: Physiological, Safety, Social, Personal, and Self-Actualization.
What occurs during the Information Search stage?
Consumers search for product information, weighing benefits against the costs of searching.
What is the significance of the consideration set?
If a product is not in the consideration set, it will not be purchased. Companies can gain insights into competitors by observing search behaviors.
How do consumers compare alternatives?
Consumers think of products as bundles of attributes, assign importance weights, and compare based on utility.
What is the Purchase stage in decision-making?
Consumers choose the product with the highest utility based on their comparisons.
What happens during the Post-Purchase Evaluation stage?
Consumer behavior continues post-purchase, where dissatisfaction can lead to returns, negative reviews, or complaints.
What factors might lead consumers to skip decision-making steps?
Low involvement products, prior information, incentives from brands, or lack of attention can cause consumers to skip steps.
How do economists and psychologists view consumer behavior differently?
Economists see consumers as rational decision-makers, while psychologists view them as boundedly rational, using heuristics.
What is the anchoring effect?
A cognitive bias where individuals rely heavily on the first piece of information encountered (the anchor) when making decisions.
What is the Decoy Effect?
The tendency to prefer one option over another when a third inferior option is introduced.
What is the Compromise Effect?
Consumers are more likely to choose intermediate options when presented with high and low-priced alternatives.
What is Mental Accounting?
The tendency to categorize and treat money differently based on its source or intended use.
What is Loss Aversion?
The principle that losses are felt more acutely than gains of the same size.
What is the Endowment Effect?
The phenomenon where people value an owned item more than an equivalent item they do not own.
What did Daniel Kahneman win the Nobel Prize for?
For integrating psychological insights into economic science, particularly in human judgment and decision-making under uncertainty.
What is the Prospect Theory Value Function?
A model that describes how people perceive gains and losses relative to a reference point, showing that losses have a greater emotional impact than equivalent gains.
What are the implications of Prospect Theory?
Segregate gains and aggregate losses to enhance perceived value and minimize negative feelings associated with expenditures.
