Psychology Review

1.Individual decision making process- and stages.

problem recognitionпÑ" evaluation of alternativesпÑ" product choiceпÑ" outcomes.

Rational perspective- people integrate as much info. As possible with what they already know about a product, weigh the pluses and minuses of each alternative, and arrive at a satisfactory decision.

Behavioral influence perspective- learned response to environmental cue, as when he decides to buy something on an impulse that is promoted as a “surprise special” in a store. Managers must decide what set up is right for display in order to influence members of the target market.

Experiential perspective- stresses the gestalt or totality of the product or service. Marketers focus on measuring consumer’s affective responses to products or services and develop offerings that elicit appropriate subjective reactions.

Routine response behavior- (habitual decision-making)- choices make w little to no conscious effort. So routinized we may not realize we made them. (Ex: buying gas)

Limited problem solving- more straightforward and simple. Not motivated to search for information or evaluate alternatives rigorously. (Which candy to buy) [little time looking for product]

Extended problem solving- initiated by a motive that is important to central self-concept. Consumer feels that eventual decision carries a great degree of risk. The consumer tries to collect as much info as possible, from both internal sources (memory) and external sources (Internet). Then each alternative is carefully evaluated. Evals are usually made by considering the attributes of the each brand. (Buying a new car or home) [a lot of time looking for it]

2. Stages of the decision making process-

Different forms of problem recognition- occurs when a consumer sees a significant difference bw his current state of affairs and some desired or ideal state. (Standard or comparison).

NEED recognition- person runs out of gas, he recognizes he needs gas. (Actual State increases)

OPPURTUNITY recognition- person craves a new car (ideal state increases)

Information search:

Prepurchase search- recognize a need then search the marketplace for specific information.

Ongoing search- veteran shoppers who enjoy browsing for the fun of it, or BC they like to stay up

To date on what’s going on.

Determinants of info search:

Internal-scanning memory banks to assemble info about different product alternatives.

External- info comes from ads, friends, or people watching.

Deliberate search- directed learning

Accidental search- incidental learning-mere exposure affect.

How much search occurs- greater when the purchase is important, when there is a need to learn about it and when the information is easily obtained and utilized.

Prior expertise- search is greatest amongst those who have moderate knowledge. People who have limited expertise may not feel they are capable or searching extensively enough. Experts engage in selective search, their efforts are more focused and efficient.

Perceived risk- belief that the product has potentially negative consequences.

Evaluation of alternatives- go over attributes of each brand, so determine which is better.

Biases in the decision making process-

Mental accounting- the way a problem is posed and whether it is put in terms of gains or losses influences our decisions. (Football ticket example-they paid they are going no matter what.)

“Sunk cost fallacy”- having paid for something makes us reluctant to waste it.

Loss aversion- people place much more emphasis on loss than they do gain. Losing money is more unpleasant for people than it is pleasant to gain money.

Prospect theory- utility is a function or gains and losses and risk differs when the consumer faces options involving gains versus those involving losses.

3. Evoked set- the alternatives a consumer knows about

Consideration set- alternatives included in deliberations about which to choose (choosing plastic surgeon- extended problem solving)

Inert set- indifferent towards

Inept set- aware of, but would not buy.

Product categorization- crucial determinant of how a product is evaluated.

Noncompensatory decision rules- choice shortcuts where a product with a low standing on one attribute can not make up for this position by being better on another attribute. People simply eliminate all options that do not meet some basic standards.

Lexicographic rule- he selects the brand that is the best on the most important attribute. If he sees 2 or more brands as equally good on that attribute, he then compares them on the second most important attribute, and this process continues until he makes a decision.

The elimination by aspects rule- also evaluates product on most important attribute, but imposes specific cutoffs. For example: a man wants a TV, he found 2 good ones he likes, but he needs one with a sleep time. So he chooses the one with the sleep timer.

The conjunctive rule- processing by brand, establishes cutoffs for each attribute. He chooses the brand that meets all the cutoffs but failure to meet any one cutoff will be rejected. If none of the brands meet all the cutoffs he may delay the choice, change the decision rule, or modify the cutoffs he chooses to apply.

Compensatory decision rules-give a product a chance to make up for its shortcomings

Simple additive rule- consumer chooses the alternative that has the largest number of positive attributes

Weighted additive rule- more complex, relative importance of positively rated attributes, essentially multiplying brand ratings by importance weights.

4. Various heuristics consumers