BMGT451 Consumer Decision Making Notes Information Search o Internal vs external search o Deliberate vs accidental learning o How much do consumers search Involvement Expertise Perceived risk o Internal searching your mind and take from what you already know o External other forms of communication talking with family looking at consumer magazines talking to store employee o Deliberate research on purpose o Accidental watch people using the product advertisements not actively seeking the information o Experts o Novices Hi knowledge Hi interest ability to interpret Lo knowledge Lo interest ability to interpret o Moderately expert Benefits the most in the middle Product Choice o Memory based choice o Stimulus based choice o Mixed choice o Decision rules Compensatory Noncompensatory o Heuristics Post Purchase Evaluation Is the large size always the better buy o Instrumental performance o Expressive performance o Satisfaction is a function of expectations o When do customers complain High value of good or service High severity of problem magnitude of loss Nature cause of problem is clear When it s easy to complain i e channels for complaining are Anchoring available o John is stubborn envious critical impulsive industrious and intelligent In general how emotional do you think John is Not emotional at all 1 2 3 4 5 6 7 Extremely emotional Prospect Theory o Integrate losses o Segregate gains Give one total price Bundle small losses with larger gains e g payroll deductions Two free bonuses Unbundle small gains from larger losses e g cash rebates Compromise Effect o Consumers don t like extremes o Having low and high options give consumers more of a reason to pick the moderate level People think in terms of 100 not 1000 Feature Fatigue o Indirect experience participants thought about why they wanted the product direct experience participants thought about how they would use it o Indirect experience salesperson reading package abstract think more when removed from the product o Direct experience using the product concrete o Preventing Feature Fatigue Provide opportunities to test products before purchase Encourage a concrete mindset before purchase focusing on Paying and Using how to use the product o Should paying and using occur at the same time or at separate times Consumers often prefer flat rate pricing How is the use of products and services affected by separating Paying and Using payments from use o The more frequently you pay the more likely you are to use the service o Give and take annual payment users are less likely to renew but the gym benefits from users not going to the gym not as much wear and tear on the equipment Sequence Effects Counterfactuals o Improving sequence consumers remember the end more base assumptions on the way they feel at the end o Mental representations of alternatives to the past o Upward counterfactuals alternative pasts that are better than reality e g I could have made the plane o Downward counterfactuals alternative pasts that are worse than reality e g At least I didn t have an accident on the way to the airport o Upward better than what we experienced could have made the flight had the taxi gone through the red light o Downward worse than what we experienced could have gotten into an accident if the taxi had gone through the red light o Who is happier at the Olympics award ceremony a silver medalist or a bronze medalist Silver generates an upward counterfactual I could have won the Gold Bronze generates a downward counterfactual At least I got a medal Silver medal are let down more bronze feels more accepting of the trophy position o Influencing Counterfactuals Proximity counterfactuals are more likely for close calls e g missing a plane by 5 vs 20 min Exceptional vs routine behavior counterfactuals are more likely for exceptional behavior e g I never buy the bargain brand why did I do it this time Taking a different route in traffic why did I go this way It took so much longer Controllability counterfactuals are more likely for behavior under the control of a focal person e g visible inefficiencies of front line staff Controllability restaurant is willing to sacrifice service time for quality food Ego defensive function of attitudes defend ourselves attitude toward instant coffee that s negative defending yourself from being embarrassed in social situations ad about deodorant Knowledge function structure preferences that are well informed Here s how to make a decision on purchasing a car safety features etc tell you more information than you need to make a choice Galvanic skin response measure of arousal can tell if someone is stressed did you steal the cookies meter goes up if you sweat more emotions are interpreted in different steps