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MKT 310 Final/Exam 2 study guide

by: Marissa Sarlls

MKT 310 Final/Exam 2 study guide MKT 310

Marketplace > University of Kentucky > Marketing > MKT 310 > MKT 310 Final Exam 2 study guide
Marissa Sarlls
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MKT 310 Final/Exam 2 study guide
Consumer Behavior
Dr. Dan Sheehan
Study Guide
Marketing, Consumer, behavior
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This 9 page Study Guide was uploaded by Marissa Sarlls on Sunday May 8, 2016. The Study Guide belongs to MKT 310 at University of Kentucky taught by Dr. Dan Sheehan in Spring 2016. Since its upload, it has received 10 views. For similar materials see Consumer Behavior in Marketing at University of Kentucky.


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Date Created: 05/08/16
The Decision-making Process (problem recognition, information search, evaluation of alternatives, product choice): Problem Recognition (The perceived difference between an ideal and an actual state (e.g., running out of milk)  Need recognition: Due to a decrease in current/actual state  Opportunity recognition: Due to an increase in ideal state  The desire to resolve a particular problem depends on the magnitude of the discrepancy btwn desired and actual, and the relative importance of the problem Information search—consumer’s attempt to obtain appropriate data to make a reasonable decision  Deliberate vs. accidental search o Deliberate/Directed learning—gather information with a purpose in mind o Accidental/Incidental learning—gather information passively, through exposure  Pre-purchase vs. ongoing search o Pre-purchase—we know a purchase is on the horizon. Information more specific o Ongoing—may not have a specific plan to purchase a product. Information gathered out of general interest (e.g., stay informed of new car models if you’re interested in cars but don’t intend to buy)  Internal search vs. external search o Internal—retrieve information from long-term memory about products or services to help with problem solving  Must have correct categorization & retrieval; might be good to have positive associations  Confirmation bias~selective perception: we tend to recall positive information better o External—the process of collecting info from outside sources (not memory)  Economic model of search—continue to search until rewards of more searching are less than the expected costs (not just money, but also motivation, ability, etc) of searching  What influences search (Product, Situational, Individual) o Product—involvement; produce important to consumer/values; expertise/knowledge  Perceived risk (monetary, functional, physical, social, psychological) o Situational—many stores in proximity, Sensory-specific satiety (quality/state of being satisfied) o Individual—these people search more  Optimizing (channel search even if they find something good to watch) versus Satisficing (fine with what’s already on TV)  “Too much choice” paradox—more options can discourage consumers from searching and cause quick truncation  Results of search / Awareness & Consideration Sets o Awareness set—brands about which the person is aware  Evoked—those products already in memory plus those prominent in the retail environment that are actively considered during a consumer’s choice process  Come to mind in a particular situation; “top of mind” awareness  Consideration set—the products a consumer actually deliberates about choosing; strategic goal  Inert set—brands about which the person is indifferent  Inept set—brands considered unacceptable Evaluation and Choice  Evaluation: (1) generate consideration set, (2) determine evaluative criteria, (3) apply decision rules to select alternative o Judgments—evaluations of likelihood estimates but do not require consumer to make a choice  Heuristic vs. Bias (both are low involvement) o Heuristics—a decision “rule of thumb” or shortcut  Used to simplify judgments and choices but can be over-applied and mislead us o Bias—use of a heuristic leads to a poor decision  Common Decision Heuristics o Availability Heuristic—focus on the ease with which instances can be brought to mind  What’s more common: words that start with “r” or have “r” as third letter?  Availability does not equal frequency  Imagining increases availability o Representative Heuristic—judge the probability that an item is a member of a class by the degree to which the item is representative of (resembles) the class  The “Linda Effect”: Just bank teller or bank teller and feminist  Gambler’s fallacy—misconception of chance (e.g., coin toss)  Hot-hand fallacy—person who has experience success with random even has greater chance of success in the future (like when someone is on a roll in basketball) o Anchoring and adjustment—when a person uses a specific target number or value as a starting point, known as an anchor, and subsequently adjusts that information until an acceptable value is reached over time (often are inadequate)  EX: car salesman offers car price way above fair value but still sells it close to that value because of the anchor o Sunk Cost Effect—the reluctance to reverse decisions that have led to negative outcomes when resources have already been “sunk” on that decision  Accountability exacerbates the effect  Buy a soda at the ball park and even though you don’t get the money back for not finishing it, you feel like it’s a waste if you don’t finish it o Decoy Effect—consumers tend to have a specific change in preference between two options when also presented with a third option that is asymmetrically dominated  Asymmetric Dominance—it is completely dominated/inferior to one option and only partially dominated by the other o Brand Name Effect—the reluctance to choose an unknown brand o Halo Effect—tendency to assume that if something is good on one attribute then it is good on all others o Compromise Effect (AKA Extremeness Aversion)—the tendency to avoid extreme responses or choices Contextual Effects in Decision Making  Framing Effects—a concept in behavioral economics that the way a problem is posed to consumers (especially in terms of gains or losses) influences the decision they make o Studied in Behavioral Decision Theory (BDT): Descriptive is how people actually make choices vs. Economics (normative—how people should make optimal choices) o Humans sometimes prefer risky options over non-risky options and visa versa o When the choices are perceived as losses (e.g., deaths), people tend to be risk- seeking  EX: (1) “200 people will be saved” vs. “1/3 probability that 600 people will be saved, and 2/3 probability that no one will be saved” people chose first option o When the choices are perceived as gains (lives saved), people tend to be risk-averse  Prospect Theory—describes how people make choices; defines utility in terms of gains and losses o Rule #1: People act differently when something is framed as a loss vs. a gain (*Risk- seeking for losses and risk-averse for gains) o Rule #2: Losses loom larger than gains (losing $10 more significant than gaining $10) o Rule #3: Evaluations are driven by individual events, not total outcomesthe isolation effect (Implication: separate gains, combine losses)  Mental Accounting—principle that states that decisions are influenced by the way a problem is posed o How we think of money dictates how we spend it. o Segregate gains (car descriptions list out attributes separately) o Integrate losses (car dealers list price in one lump sum) o Silver lining effect (Separate out small gain from big loss) EX: $500 cash back when you buy a Nissan o Cancel losses against larger gains (paycheck deductions for insurance or investments  Normative vs. Descriptive Decision theories  at odds in decision science o Normative—focus is on finding rules that lead to the “best” decision in a given situation…how should consumers choose? Suggests we make rational decisions but research shows we are not rational o  Primarily used by economists…”best alternative”  Expected Value (EV) theory—how much is an uncertain option worth? Deals with uncertain outcomes and seems far removed from how we might choose between products  Rational Theory of Consumer Choice or Multiattribute Utility Theory (MAUT)— assumes that produce attributes are the carriers of value  The utility of a product can be decomposed into utilities of the attributes and attribute importance weights (weights and values always multiplied together) o Descriptive—focus on describing how people make decisions…How do consumers actually choose?  Primarily used by psychologists  Task effects (e.g., number of alternatives, attributes, time constraint, etc.)—refer to the general characteristics of the decision problem in terms of complexity  Context effects (e.g., framing effects, situation effects)—reflect the influence of particular values of the objects in particular decision sets…Prospect theory  Impact of emotion (e.g., negative affect triggered by trade-off difficulties; perceived regret)  Reference Points—used to make evaluations and determine if things are a gain or loss (prospect theory) o Can be manipulated o Context is important o Diminishing sensitivity—our minds focus on the relative differences, rather than absolute. Our sensitivity diminishes as the numbers get larger  The effort / accuracy framework Accuracy(goodoutcome) want to maximize the ratio of Effort(cognitivework) accuracy to effort and minimize regret  Decision Rules: o Compensatory rules vs. Noncompensatory decision rules  Compensatory—a set of rules that allows information about attributes of competing products to be averaged in some way; poor standing on one attribute can potentially be offset by good standing on another  Noncompensatory—decision shortcuts a consumer makes when a product with a low standing on one attribute cannot make up for this position by being better on another attribute  Lexicographic (LEX) rule: Select brand with best value for most important attribute.  Elimination by Aspects (EBA) rule: Apply a cutoff on the most important attribute and reject all brands worse than the cutoff. Continue to second attribute…etc.  Conjunctive rule: Set cutoffs on each attribute. If brand meets all cutoffs, buy Post Purchase  Satisfaction and dissatisfaction) “A post-choice evaluative judgment concerning a specific purchase selection”  Post-decision dissonance  The Disconfirmation Paradigm - Expectancy-disconfirmation modelexpectations formed o Expectancy met, or positive disconfirmation (better than expected) o Negative disconfirmation (worse than expected) o Confirmation/disconfirmation is largely subjective  Equity theory (focuses on determining whether the distribution of resources is fair to both relational partners) and satisfaction  perceived fairness or unfairness can affect satisfaction/dissatisfaction Social Influence (Information and pressures from individuals, groups, and the mass media that affect how a person behaves)  Motives: o Value-Expressive/Identification (Wish to identify with group/person/hero)—want people to know who we are o Normative social influence (Meet society/group’s expectations)—how we should act according to society’s expectations o Informational Social Influence (Information to help make decisions)—want to know more about a product/situation so look at reviews  Opinion Leadership  The Market Maven—expert in the shopping domain  Reference groups—an actual or imaginary individual or group that has a significant effect on an individual’s evaluations, aspirations, or behavior; any external influence that provides social cues (Basic assumption: Our desire to ‘fit in’ or to identify with desirable individuals or groups is the primary motivation for many of our purchases and activities.) o Aspirational reference group—high-profile athletes and celebrities used in marketing efforts to promote a product o Associative / membership reference group—people we actually know; ordinary people whose consumption activities provide informational social influence o Dissociative / avoidance reference group—reference groups that exert a negative influence on individuals because they are motivated to distance themselves from group members (ppl we dislike) o In-Group vs. Out-Group  Outgroup homogeneity bias—one’s perception of out-group members as more similar to one another than are in-group members (e.g., “they are alike; we are diverse”  Normative Influence and Conformity o Normative influence—the reference group helps to set and enforce fundamental standards of conduct o Social Power—describes “the capacity to alter the actions of others” to the degree to which you are able to make someone else do something  Expert power—influence over others due to specialized knowledge about a subject  Coercive power—influence over another person due to social or physical intimidation cohesiveness  Reward power—a person or group with the means to provide positive reinforcement  Legitimate power—influence over others due to a position conferred by a society or organization  By virtue of social agreements, such as the authority we give officers, soldiers o Conformity—a change in beliefs or actions as a reaction to real or imagined group pressure  In order for a society to function, its member develop norms Family influence  Defining the modern family oExtended family—three generations who live together, and it often includes grandparents, aunts, uncles, and cousins oNuclear family—a mother, a father, and one or more children oHousehold—any occupied housing unit, regardless of the relationships among the people that live there  Trends in U.S. Household Structure the average American’s standard of living continues to improve due to: oAn increase of dual income households (but does not mean higher status) oIncreases in educational attainment  Talked About Segments ( DINKs / “Sandwich generation” / Boomerang kids oBoomerang kids—grown children who return to their parents’ home to live oSandwich Generation—a description of middle-aged people who must care for both children and parents simultaneously They must support both the generation above them and the one below them oDINKS—Dual income, no kids. Target market for luxury items  Organization Decision Making Roles (Gatekeeper / Influencer / Decider / Buyer / User ) oGatekeeper—the person who conducts the information search and controls the flow of information available to the group. Identifies possible vendors and products for the rest of the group to consider oInfluencer—the person who tried to sway the outcome of the decision. Some people may be more motivated than others to get involved, and participants also possess different amounts of power to get their point across oDecider/Initiator—the person who brings up the idea or identifies a need oBuyer—the person who actually makes the purchase. The buyer may or may not actually use the product oUser—the person who actually consumers the product or service  Family Life Cycle Models (FLC)—a classification scheme that segments consumers in terms of changes in income and family composition and the changes in demands placed on this income  Autonomic (when one family member chooses a product for the whole family) vs. Syncretic decisions (purchase decision made jointly by both spouses)  Pets as Family members Age and Consumer Behavior  Children as decision makers oChildren don’t understand persuasive intent of ads o“Host Selling” –using Spongebob to advertise products  Dodging Disney in the Delivery Room  Teens  Age Generations (Gray Market (pre-boomers) / Baby Bo0mers / X / Y / Z)  Gender and Consumer Behavior Income and Social Class  Components of social class (Occupational prestige / Income / Etc.)—determined by income, family background, and occupation oOccupational prestige—*single best indicator of social class; stable over time and similar across cultures oIncome—wealth not distributed evenly across classes…important is how money is spent, not how much  What it influences?  Social class fragmentation—disappearance of class distinctions oUpward mobility vs. downward mobility  Conspicuous consumption - the acquisition and display of goods and services to show off one’s status  Conspicuous waste – visibly buying products and services that one never uses, or intentionally abuses  Status symbols – products or services that tell others about someone’s social class standing  Parody display – status symbols that start in the lower classes and move upward  Fraudulent symbols – status symbols that become so widely adopted that they lose their status  Compensatory consumption - the consumer behavior of buying products or services to offset frustration or difficulties in life.  Low Income Consumers—consumers unable to obtain “adequate” and “socially acceptable” standard of living oFaulty assumptions, exchange restrictions (supplier has upper hand), health consequences and price discrimination: Direct (high supermarket prices) or indirect (lack of storage space, bulk buying) Psychographics:  Personality—A person’s unique psychological makeup and how it consistently influences the way a person responds to his or her environment  Psychoanalytic approaches—personality arises from a set of dynamic, unconscious internal struggles with the mind oFreudian Theory—much of one’s adult personality comes from a fundamental conflict between a person’s desire to gratify his or her physical needs and the necessity to function as a responsible member of society Highlights the potential importance of unconscious motives that guide our purchases ID—immediate gratification; selfish and illogical; “I want that right now!”  Pleasure principle—our basic desire to maximize pleasure and avoid pain guides our behavior Superego—a person’s conscience that internalizes society’s rules and tried to prevent the id from seeking selfish gratification; the counterweight to the id Ego—balance, reality principle; the system that mediates between the id and superego  Reality principle—ego tries to balance id and superego in a way that the outside world would find acceptable  Trait approaches—personality is comprised of characteristics that describe and differentiate individuals oPersonality traits: Internal characteristics of individuals that are formed at an early age and are relatively unchanging oOCEAN—Openness, Conscientiousness, Extraversion, Agreeableness, Neuroticism  Brand Personality o5 Dimensions of Brand Personality—SCRES—Sincerity, competence, ruggedness, excitement, sophistication oAnimism—personality given to objects; inanimate objects are given alive qualities oAnthropomorphism—the tendency to attribute human characteristics to objects or animals  Phenomenological approaches—personality is largely shaped by interpretations of life events, locus of control, etc.  Values—they are enduring and guide your behavior value system is the set of values + their relative importance  Describing Values: oGlobal—most enduring, strongly-held and abstract values that hold in many situations (e.g., freedom) Terminal valued (ends) and Instrumental values (means) oDomain-specific values—apply to only a particular area of activities (e.g., religion/family)  Measuring Values: oInferring values from the culture oValue questionnaires oMeans-end chain analysis (MEC)—adopts the basic assumption that each product is linked at levels of increasing abstraction to terminal values (aka laddering) Attribute Consequences  Value  Lifestyle—patterns of consumption reflecting a person’s choices of how one spends time and money oAIOs –Activities, Interests, and Opinions  VALS (Values and Lifestyles System) Segmentation System—a psychographic segmentation system oConsumers who are primarily motivated by ideals are guided by knowledge and principles oConsumers who are primarily motivated by achievement look for products and services that demonstrate success to their peers oConsumers who are primarily motivated by self-expression desire social or physical activity, variety, and risk  PRIZM (Potential Rating Index by Zip Market)—consumer segmentation  Regional & Religious influences oReligion has been understudied but can be efficient predictor of consumer behavior oRise of spirituality  Megachurches adopting aggressive marketing  Regional influences around the U.S oHofstede’s Cultural Dimensions: Power distance Uncertainty avoidance Individualism/Collectivism Masculinity/Femininity or Achievement/Nurturance Long term vs. Short term orientation  Standardization vs. Customization oProduct Strategy—understand the need; when and why customize products oCommunication Strategy—positioning vs. communication; media challenges oDistribution Strategy—distribution options and challenges; push vs. pull; direct vs indirect oPricing Strategy—perceptions of value and WTP changes; price alignment pressures; gray markets The Darkside of Consumer Behavior  Do marketers create artificial needs? oObjective of marketing is to create awareness that needs exist (and to recommend ways to satisfy it), not to create needs Need: basic biological motive Want: one way that society has taught us that the need can be satisfied oAdvertisers simply do not know enough about people to manipulate them Failure rate for new products: 40% to 80%  Marketers can violate consumer rights / Deceptive advertising and labeling oFalse objective claims – making an invalid claim oPuffery—an exaggerated claim (ex: America’s best pasta sauce) oMissing information—a literally truthful claim made in an ad can still be deceptive to consumers oAllowing incorrect inferences (showing fresh fruit in ad when fruit drink only contains artificial) oDeceptive personal selling tactics Bait and switch Misrepresenting the selling intent oAdvertising to children  Negative Effects of Marketing oSelf-image Social comparison theory—a theory that proposes that individuals have a drive to compare themselves to other people oMisrepresent segments of consumers Ignoring key segments (women, minorities, and the elderly under-represented Stereotyping key segments—consumer segments are sometimes represented in advertising in stereotypical or inappropriate ways oInvade consumers’ privacy—public domain  Ethics vs. Laws oEthics—the moral principles and values that govern the actions and decisions of an individual or group Conflicts often arise between the goal to succeed in the marketplace and the goal to maximize consumer well-being oLaws—society’s values and standards that are enforceable in the courts  AMA Code of Ethics: oMarkets must do no harm oMarketers must foster trust in the marketing system oMarketers must embrace, communicate and practice the fundamental ethical values that will improve consumer confidence in the integrity of the marketing exchange system  Consumer “Dark Side” oCompulsive Consumption—repetitive behavior as an antidote to tension, anxiety, depression, or boredom. oConsumer terrorism—placing toxic substances in products (ex: Cyanide in Tylenol oIllegal activities—theft, black markets oAddictive consumption—psychological or physiological dependency on products or services oConsumed consumers—people who are used or exploited, willingly or not, for commercial gain  3 aspects of negative or destructive consumer behavior: oThe gratification derived from the behavior is short-lived oThe behavior is not done by choice o The person experiences strong feelings of regret or guilt afterwards


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