Study guide test 2
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This 15 page Study Guide was uploaded by Andrea Faria on Tuesday March 31, 2015. The Study Guide belongs to 310 at a university taught by Irmark Clagar in Spring2015. Since its upload, it has received 39 views.
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Date Created: 03/31/15
MKT 310 TEST 2 CHAPTER 7 PROBLEM RECOGNITION AND INFORMATION SEARCH DECISIIDN MAKING AS PROBLEM SOLVING Problem Recognition articulation of weed want or desire i Seardh iior Altennative Solutions iiniionmaliioni search i Evaluation of ilitemaitivee i Purchase i Fost purdhaee Lise B Revaluation oi Chosen Alternatiwe Types of Consumer Decisions Continuum of Decision Making an r mmmmm Mitzi loam E 39ulil39E Eii i E Fausz aErg E inl39mzui I Fu asing Lei mew latass i Hamaim I39wim t Fania Fi iuzi I321 er E 2er 2 EJ iarr aliErPrcdzti Imam Eiz dl mum air 3 E IiEiEiiE39TlimEil Euro a39d PHI Tuna Em Iu litea Gram Fuzhaae Perceived risk 0 Extent to which a consumer is uncertain about the consequences of buying using or disposing a product Performance risk Physical risk Social risk Psychological risk Time risk 0 Problem recognition 0 Occurs when consumer notices difference between current state and ideal state Two ways 0 Need Recognition actual state moved downward 0 Running out of product buying a de cient product or creating new needs Opportunity recognition idea state moves upward 0 Exposed to differentbetter quality products standard of comparison 0 How can marketers create problems 0 Changeestablish ideal deas are not constant 0 Bring awareness of the actual Inform consumers of the way things really are 0 Created dissatisfaction with the actual 0 Make a new actual possible 0 Search for alternatives solutions 0 Motivated retrieval of knowledge from memory or acquisition of information from the environment 0 Internal Search availability bias Memories Scan for decisionrelevant knowledge in LTM If sufficient external search not necessary 0 External Search con rmation bias Two types 0 Pre purchase 0 Motivated by desire to make better choices extrinsic Ongoing o Motivated by desire to develop expertise for fun or use in future decisionmaking Intrinsic The economics of information 0 Do consumers get full information and then optimize their decision 0 Consumers will gather as much data as needed to make informed decisions We will collect most valuable information rst We continue to search until costs exceed utility of information search 0 In uence of Consumer s prior expertise on search m39DllJHT lF EEAHEH mummmmt For how much amp How long do we search 0 Depends on Importance of task Involvement Perceived costsbene ts Discrepancy of information Expertise Availability of information Time 0 Do people search enough 0 Generally people under search Look at only 12 sources before buying a car or major appHance 0 People search for prices Only 15 reported checking prices of other brands Only 49 noticed when a product was on sale Only 40 reminded the wrong price 0 Make sure people notice the product is on sale o Is searching accurate 0 Availability bias Recall information that is more accessible but not necessarily more diagnostic 0 Con rmation bias Find information that is consistent with attitudes Find information that proves but do not usually try to falsify CHAPTER 8 jUDMENT AND DECISION MAKING HIGH EFFORT DEGiISlI lM MAKING AS lP RDlElLElM SDLVING Problem Recognition ariioulation of hood wont r dooiro l Soarolh fr ltonnoiivo Sollluitioino fiiinlfnn liatiion ooaroh Evaluation fAlltoirnoitivoo Poirohaoo Foot ourdhaoo Use amp Ronallluuatioin of Enoooin Altornatiiivo 0 Consideration Set 0 Group of products seriously taken into account when making a decision 0 Ex Best buy all cameras of all types but you only will chose the brands you know very hard to consider a random brand GOMlSIllDlERATIOlN SET FORMATION Brands found Brands through found Intentional EEBIdEI39llltaIIlji39 search I ll 0 Identifying Alternatives 0 Evoked set vs Consideration set We usually don t seriously consider every brand we know about Consideration set may include brands that are not in the evoked set 0 Marketers must focus on getting their brands in consumer s consideration set 0 How many alternatives do we actually considerevaluate o Depends on decisionmaking process Extended problem solving evaluation of several brands May also consider multiple brands in limited problem solving 0 Typical consideration set 28 Habitual decision making consider fewno brand alternatives 0 Evaluate criteria 0 Dimensions used to judged merits of competing options 0 Determinant attributes feature we use to differentiate among our choices I Criteria on which products differ carry more weight tooth paste industry Marketers educate consumers about or even invent determinant attributes 0 Alternative Evaluation 0 Selection of a decision strategy Consumers use different decision strategies to choose best alternative 0 Range from simple to elaborate Two basic types Noncompensatory strategies 0 Weakness in one attribute cannot be compensated for by strength on another attribute Compensatory strategies 0 Weakness in one attribute can be compensated for by a strength on another attribute 0 Ex resort You only want to pay certain amount but if you pay more you will receive a better room and this and that 0 Ex Car example choose a coupe car it is non compensatory choice Sportiness 4 Luxurious 3 Fuel efficient 2 Pricing 1 0 Non compensatory strategies Three types Lexicographic O O O Bands compared on most important attribute If one brand is perceived as best based on that attribute it is selected If two or more are perceived to be equally attractive they are compared on the second most important attribute o Elimination by Aspects O O O O Cutoffs imposed on all attributes Brands evaluated on the most important attribute If only one brand exceeds the cutoff it is chosen If more than one brand exceeds the cutoff comparison continues until tie is broken Conjunctive O O O Cutoffs imposed on all attributes Each brand is compared one at a time against entire set of cutoffs Brand exceeding cutoffs for all attributed is chosen Compensatory strategies 0 Two types 0 0 Simple addictive Count or add the number of times each alternative is judged favorably in terms of the evaluate criteria better attribute on something will compensate for bad in other Weighted additive Incorporate relative importance of evaluative criteria Many times the decision rooess proceeds in two etagear Monsoompensatory llluletll39lodls Gompenssatury Method DECISION MAKING STRATEGIES II Moncompensatory Compensatory Gomilunotive Sim IE WEI QW EEI Lexioographllo EBA Addi we Additive o What determines which rules are used 0 Number of alternatives 0 Format Process information the way it is displayed concreteness principle gt easier to use Marketers can structure the information the way they want consumers to process them CHAPTER 8 JUDMENT AND DECISION MAKING LOW EFFORT Compromise effect 0 Tendency to choose the middle option LOW EFFORTJUDGMENT AND DECISION MAKING HEURISTICS AND BIASES Use Heuristics 0 Rules of thumb shortcuts Why 0 Information overload 0 Remember consumers are lazy and we do not have the ability to process all 30000 SKUs in a grocery story or 1308 plasma TVs on amazon 0 Heuristics make things easier Heuristic or Bias 0 Heuristic A decision quotrule of thumbquot or shortcut Make our lives easier Nothing inherently wrong about them but 0 Bias Use or overuse of heuristic leads to a poor decision Problems happen if we over apply a heuristic 0 Availability Heuristic o What kills more people lighting strikes or tornados Avg 82 deathsyears vs 33 deathsyear 0 Availability Heuristic Making decisions based on what comes to mind If something is available to memory its judged to be more likely Number of memories frequency of event 0 Availability Heuristic amp Marketing 0 Present your brand more often gt increase accessibility in memory ex headOn headache product 0 Provide consumers with positive and vivid product experiences gt increase vividness in memory ex disneyland politicians market and talk about what people fear not what is the most dangerous ex terrorist attacks vs global warming Representativeness Heuristic o If it seems like what it would be like if it were true then it is true Ad s showing the outcomes of product usage 0 People prefer items that are most like prototypes best represent the category whether they are best or not Baserate fallacyneglect 0 Prior probability is ignored when making a judgment 0 Honda civics are one of the most commonly stolen car What s the prior possibility o 80 of the people in car accidents are on the phone What s the prior probability Fundamental Attribution Error FAE 0 People over attribute other s actions to their personality and under attribute to the situation 0 People may do the opposite for their own actions If you behave badly you attribute to the solution not anything about you If you perform well it s because you are smart Representative amp Marketing 0 Representatives Heuristic Position brands close to the prototype First mover advantage Show positive outcomes of using your product 0 Base rate fallacy Provide consumers with baserate information 0 Recommended by 4 of 5 dentists One vivid dentist recommending Crest 3 factors necessary for causation 0 Correlation Storks and babies in the same house 0 Temporal Antecedence Storks babies 0 No third factor driving both Houses with pregnant women warmer Correlation and Causation 0 Correlation Relationship between two variables 0 Causation One variable producing an effect in another variable 0 Correlation does not equal to causation Bringing all together 0 When searching for reasons Availability rather than diagnosticity Correlation rather than causation Desired rather than objective factors may be considered more often The anchoring trap o The mind gives disproportionate weight to the rst information it receives 0 What can you do about it Use different perspectives starting points Think by yourself before taking advice Seek opinion from many people Avoid boomerang effects The Status Quo Trap 0 A strong tendency to favor the status quo the option at hand the reference point 0 Why Desire to protect our egos from damage Avoid effort to choose Commission doing something mistakes are perceived to be more important than omission doing nothing mistakes The Sunk Cost Trap 0 Costs that have already been incurred and which cannot be recovered o Sunk costs should not in uence our decisions because doing so would not be assessing a decision exclusively on its own 0 Don t throw good money after bad 0 The con rmation evidence trap o The tendency to quot see what you expect to seequot people will interpret information in a way that supports or con rms their prior expectations We search for evidence that con rms our attitudes Often fail to search for evidence that discon rms 0 Con rmation Bias in consumer behavior Con rm hypotheses generated by ads 0 The framing trap amp loss aversion o Losses loom larger than equivalent amount of gains Framing a question as loss vs gain impacts decisions 0 Frames impact decisions by changing reference points 0 Mental Accounting 0 The same amount of money is treated differently depending on how it is received or lost Rebates Reward points earned by credit card usage Tax refunds The estimating and Forecasting Traps o Estimations of probabilities ranges distances The overcon dence trap don t be too con dent The prudence trap don t be too cautious The recall ability trap availability heuristic 0 Even more biases self positivity bias 0 Self positivity bias Thinking bad things happen to other people but not to us Reason why people smoke drive drunk speed bake in the sun 0 Marketing implication have to convince people they are indeed at risk Tell about frequent ordinary behavior that lead to the risk Outgroup Homogeneity 0 Yu feel people in the outgroup are more like each other than they themselves feel they are People in an outgroup are all alike 0 Example You are a man making an ad meant to appeal to women You put uffy pillows kittens and pinkish colors in the ad You are a women making an ad meant to appeal to men You put a basketball playing pit bulls and car wax l the ad Halo Effect 0 The tendency to assume that if something is good on one attribute then it is good on all others Person who is good at X is thought to be good at Y even if the two are not related Attractive people often seen as nicer more skilled etc Opposite horns effect don t like one attribute of the product and that makes you not like the product and company Marketing examples lpod gt positive effect on perceptions of other Apple products you like so much the ipod that you become idolizing the company itself 0 Consider this 0 You bought a concert ticket for 100 0 On your way to the concert you discover that you lost the ticket 0 Would you buy another one 0 Now consider this o On your way to concert for which tickets sell for 100 you discover that you lost 100 0 Would you buy a ticket 0 100100 bucks Mental accounting 0 The same amount of money is treated differently depending on how it is received or lost Rebates Rewards points earned by credit card usage Tax refunds The estimating and forecasting traps o Estimations of probabilities ranges distances The overcon dence trap don t be too con dent The prudence trap don t be to cautious The recall ability trap availability heuristic CHAPTER 10 POST DECISION PROCESSES Why care post sale 0 Repeat purchases 5 times more expensive to get a new customer 0 Low involvement purchases Attitude can be formed after choice 0 WOM product information transmitted by individuals to individuals In uences twothirds of all sales Particularly powerful when we are unfamiliar w product category Weigh negative WOM more heavily than we do positive comments 0 Post Decision Dissonance o Feelings of uncertainty about whether you made the correct choice 0 Marketers should make customers Feel good about their purchase decisions Con dent about their purchase decisions 0 Post Decision Regret o Regret unchosen chosen When consumers perceive an unfavorable comparison between chosen alternative and unchosen alternatives Consumers make decisions to avoid regret eg don t continue shopping after buying one product Regret actions more than inactions Satisfaction Expectancy Discon rmation Model 0 Satisfaction Actual Expected Satisfaction actual performance product expectations Actual is below expectations a Dissatis ed Actual is equal to expectations a Satis ed Actual is above expectations a Delighted 12 1 12 positive experiences 1 negative expenence 0 Two Options 0 Manage Expectations Spell out clear de nitive and simple messages to customers Set expectations accurately Communicate consistent messages 0 2 Manage Outcome actual Deliver the product as expected Respond to product failures Attribution Theory amp Satisfaction 0 People want to know who to blame when something goes wrong with an offering 0 Three factors in uence who gets blamed Stability Focus Controllability o Fundamental Attribution Error Look for External rather than Internal causes 0 Equity Theory amp Satisfaction 0 We want fair exchanges 0 Inputs should equal outputs 0 Costs should equal bene ts Strong Ideas of Fairness o If my bene t is the same as someone ese s my cost should be the same o If my costs are equal to someone ese s our bene ts should also be the same 0 Punish people rms that do not act fairly Other PostPurchase lssues Besides Satisfaction o How do consumers dispose of goods 0 De nition of Consumer Behavior The totality of consumers decisions with respect to the acquisition consumption and disposition of goods services time and ideas by people over time Why do Marketers Need to Understand Disposal 0 Need to understand ow of used goods to markets that depend on them Lots of money in it Secondhand markets eBay ea markets etc Selfstorage Charities 0 Public policy implications Which allocation would you choose 0 You have to decide how to divide 20 between yourself and un unknown partner You will never meet this partner and the will not know who you are You have the following two choices for allocating money You can give 10 to yourself and 10 to your partner You can give 18 to your self and 2 to your partner 0 In the previous experiment person U allocate 18 to himself and 2 to his partner Person E allocated 10 to himself and 10 to his partner Now you have to decide how to divide the money between yourself person U and person E You have two choices for allocating the money You can give 5 to yourself and nothing to person U and 5 to person E You can give 6 to yourself 6 to person U and nothing to person E
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