Judgment & Decision Making Based on High Consumer Effort Chapter 8 Judgment & Decision Making Based on High Consumer Effort

Learning Objectives~ Ch. 8 To understand why judgment & decision making is important in consumer behavior To access types of cognitive models for high-effort decision making & influencing To know the role of affective decisions in high-effort situations To identify types of high-effort decisions made by consumers & how marketers can influence them

Judgment & Decision Making: High Consumer Effort

High-Effort Judgment Processes Estimation of likelihood Goodness/badness Anchoring/adjustment Imagery Conjunctive probability assessment Illusory correlation

Biases in Judgment Processes Confirmation Self-positivity—prime Negativity Mood Prior brand evaluations What past brand experiences have biased your judgment about future brand consumption?

High-Effort Consumer Decisions~1 Deciding which brands to consider There is a vast menu of choices that you must break down to possible choices Consideration set (evoke set) Deciding what is important to the choice Goals Time Framing

High-Effort Consumer Decisions~2 Deciding what offerings to choose Thought-based decisions Brands Product attributes Gains & losses Feeling-based decisions Appraisals & feelings Affective forecasts

High-Effort Consumer Decisions~3 Deciding whether to make a decision now Decision delay Deciding when alternatives cannot be compared

High-Effort Decision Making Processes Consideration set Inept set Inert set What are the differences among these sets?

High-Effort Thought-Based Decisions Cognitive decision-making models Types of decision processes Compensatory vs. noncompensatory Brand vs. attribute Compensatory brand-processing models Additive difference model

Cognitive Choice Models

Brand Processing Models Compensatory Models Multiattribute models (Theory of Reasoned Action [TORA]) Noncompensatory Models Conjunctive model Disjunctive model What is the main difference between compensatory and noncompensatory models?

Brand vs. Attribute Models Noncompensatory brand-processing models Cutoff levels Models Conjunctive Disjunctive Noncompensatory attribute-processing models Lexicographic Elimination-by-aspects Multiple models

Noncompensatory Attribute Processing Models Elimination by Aspects Attributes ordered by importance; alternatives acceptable on first attribute proceed to evaluation on further attributes I will eliminate any brands with a value of 3 or below, beginning with most important attribute Note the “most important” attribute is up to the consumer (e.g., car safety, style, value/gas mileage, etc.)

Decisions Based on Gains & Losses Prospect Theory Losses have more influence than gains Think-have you ever spent more on gas to “save” on a price? Consumers have stronger reaction to price increases than price decreases Endowment effect Ownership increases value (& loss) associated with an item This is why the 24 hour test drive of vehicles is often a success

High-Effort Feeling-Based Decisions Affective decision making: decisions are made in a more holistic manner on the basis of feelings or emotions What is an example of an affective-based purchase that you have made? Was it a good purchase in retrospect? Why/not?

Affective Decision-Making Appraisal Theory: how your emotions are determined by the way you appraise the situation; explains how & why certain emotions can affect future judgments & choices Affective Forecasting: you predict how you will feel in the future Valence Intensity Duration Imagery: you imagine yourself consuming a product or service; a key role in emotional decision making

Additional High-Effort Decisions Decision delay Decision too risky Decision entails unpleasant task Decision making when alternatives cannot be compared (noncomparable decisions)

Noncomparable Decisions Noncomparable Decisions: process of making decisions about products or services from different categories (e.g., weekend entertainment) Consumers use an alternative-based strategy OR an attribute-based strategy 2 Main Consumer Strategies: Alternative-Based (top-down processing): overall evaluation, may use pros & cons Attribute-Based (bottom-up processing): consumers form abstract representations to help them compare options

Contextual Effects on Consumer Decision Making Consumer Characteristics Task Characteristics Task Definition/Framing Presence of a Group

Consumer Characteristics Affecting Decision Making Expertise Mood Time pressure Extremeness aversion Metacognitive experiences

Task Characteristics Affecting Decision Making Information availability Information format Trivial attributes

Group Decision Making How does your consumer behavior/decisions change when you are alone vs. with: your friends? parents? Individual-alone goals Individual-group goals

Group Context & Decision Making Self-Presentation Minimizing Regret Information Gathering

Goal Classes Affecting Decision Making

© GEICO 2008 Geico gecko is an effective retrieval cue in insurance; generally a high-effort decision. Geico has used repetition to ensure that the gecko/Geico link is stored in consumers’ long-term memory.

Automobiles: high effort consumer decision Courtesy Daimler AG Automobiles: high effort consumer decision Smart car has been touted as being environmentally friendly. This ad demonstrates another benefit of the Smart car: the goal of parking in a city.

Questions?