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17 Cards in this Set

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Types of Decision Making

Extended Problem Solving: initiated by a motive that is central to self-concept. Decision carries a fair amount of risk


Limited Problem Solving: simple decisions rules to compare alternatives


Habitual Decision Making: little or no conscious effort, hard to get people to change. Inertia.

Problem Recognition

Difference between our current state of affairs and some state that we desire.


Opportunity recognition: better quality of products available


Need Recognition: runs out of product

Internal Search

Recall of brands - evoked set


Recall of attributes - accessibility and which will be more useful


Recall of experiences and evaluations




Confirmation bias - look at information that confirms what we already know or want to know

External Search

MAO


Motivation: involvement, risk, costs and benefits


Ability: knowledge, cognitive abilities, demographics


Opportunity: amount of time and information available


Brand and attribute

Heuristic

Mental rules of thumb that make a quick decision


ex. Higher price = higher qualtiy

Market Beliefs - Heuristic

Consumer assumptions about companies, products, and stores that become shortcuts for decisions.


ex. locally owned stores give better service


Used with limited information

Stereotype

Inferences about products such as country of origin.


Rate our own country better, industrialized countries make the best products, and strong associations between products and countries.

Product Signal

Visible aspect of the product that infers performance quality.

Compensatory

One good attribute can compensate for other poor attributes.

Types of Choice Models

Compensatory:


Multi-attribute Model (brand)


Additive Difference Model (attribute)




Non-compensatory:


Conjunctive/Disjunctive Model (brand)


Lexicographic and Eliminate-by-aspects Model (attributes)

Multi-attribute Model - Compensatory

Calculate the ranking for each attribute and then multiply it by its importance rate.


Do this for every brand, the brand with the highest score is the one you buy.

Additive Difference Model - Compensatory

2 brands face-off on each attribute, the differences add up makes a decision.


If the total is:


(+) then chose the left side


(-) then chose the right side

Conjunctive/Disjunctive Model - Non-compensatory

Conjunctive (-): minimum cutoffs set for reach attribute. Ex. nothing below a 3.




Disjunctive (+): higher than minimum cutoffs, based on a few important attributes. Ex. brands that score 4 or more on 3 attributes (weight, price, battery)

Lexicographic and Elimination-by-aspects Model - Non-compensatory

Lexicographic: brand that is the best on the most important attribute is selected. Move on to the 2nd most important in the case of a tie.




Elimination-by-aspects: attributes are ordered by importance, those who have the first most important move on to the next round. ex. eliminate those with a three on the most important attribute.

Reality of Consumer Decision Making

All alternatives > Non-compensatory > Compensatory




Leave compensatory to a small number of alternatives

Consumer Hyper-choice

Large number of available options forces us to make repeated decisions that may drain psychological energy while decreasing our ability to make smart decisions.

Bounded Rationality

Don't have the time and resources so we will settle for a solution that is good enough.


Maximizing and satisficing