1. Chapter 9 Judgment & Decision Making Based on Low Consumer Effort

2. Learning Objectives~ Ch. 9 To understand: 1.Heuristics & simple judgment 2.Conscious & unconscious decisions 3.Hierarchy of effects, decision heuristics, & operant conditioning 4.Thought-based strategies of performance tactics, habit, brand loyalty, price-related tactics, & normative influences 5.Feeling-based strategies of affective tactics, variety seeking, & impulse purchasing

3. Judgment & Decision Making: Low Consumer Effort

4. Shortcuts in Making Low- Effort Judgments A heuristic is a “rule of thumb” to simplify things A. Representativeness Heuristic: Comparing a stimulus with the category prototype/exemplar B. Availability Heuristics: Basing judgments on events that are easier to recall –Base-Rate Information –Law of Small Numbers

5. Unconscious Low-Effort Decision Making You may make a decision without being consciously aware of how or why you are doing so. Example? Use of all senses Environmental stimuli Automatic goal-relevant behavior

6. Conscious Low-Effort Decision Making Low-Effort vs. High-Effort Decision Making Hierarchy of Effects –Thinking > Feeling > Behaving –Passive/Incidental Learning –Post-Purchase –Thinking > Behaving > Feeling Simplifying Strategies –Optimizing –Satisfice

7. Hierarchy of Effects

8. Consumer Learning Process

9. How Consumers Learn to Apply Choice Tactics Choice tactic: simple rule of thumb consumers use to make low-effort decisions Consumers may learn choice tactics via: Operant Conditioning: behavior is ƒ(previous actions & reinforcements or punishments obtained from these actions) –Reinforcement –Punishment –Repeat Purchase Choice = Product Dependent

10. Simplifying Strategies in Low Elaboration Contexts Recall, in low effort contexts (e.g., beverage) consumers apply different choice tactics than in high effort contexts (e.g., new car) Simplifying Strategies: When MAO is low, consumers are motivated to simplify the cognitive process with heuristics How a message is framed influences how consumers react

11. Choice Tactics 1. Performance-related 2. Habit 3. Brand Loyalty 4. Price 5. Normative influences 6. Feelings/affect 7. Variety Seeking (note, you may recognize these in the left box of the consumer-learning process figure shown prior)

12. 1. Performance as a Simplifying Strategy Performance-Related Tactics: when the outcome of the consumption process is positive reinforcement Can be an overall evaluation of performance, or focused on a specific attribute or benefit –Quality –Important features/benefits –Sales promotions

13. 2. Habit as a Simplifying Strategy Having a habit (e.g., in the grocery store) is a simplifying strategy Habits can make life simpler & or more manageable Habit—Repeat Purchase, Shaping –Little/no information sought –Little/no evaluation of alternatives –Promotion/distribution policies

14. 3. Brand Loyalty as a Simplifying Strategy Brand/Multibrand Loyalty –Purchase pattern + commitment to brand –Cognitive lock-in –Resistant to competitive efforts –Quality/Satisfaction

15. 4. Price as a Simplifying Strategy Marketer Side Price Considerations: -Coupons -Price-offs -Rebates -Two-for-ones -Savings must be: at or above the just noticeable difference & within zone of acceptance -Special pricing must not be used too often or risk of dilution Consumer Side Price Considerations: -Zone of Acceptance -Price Perceptions -Deal-Prone Consumers -Price consciousness is not static

16. 5. Normative Influences as a Simplifying Strategy Others can influence consumers’ low-elaboration decision making Normative Influences –Direct –Vicarious –Indirect

17. 6. Feelings/Affect as a Simplifying Strategy Affect: low level feelings Think of a brand you just like, & you don’t really know why. Affect does not necessarily result from a conscious recognition of need satisfaction Affect is weaker than attitude Affect referral: the “how do I feel about it heuristic” Affect is often generated from brand familiarity The mere exposure effect Visual Attributes Co-Branding

18. 7. Decision Making Based on Variety-Seeking Needs Variety-Seeking Needs (e.g., in soft drinks) –Satiation/Boredom –Optimal Stimulation/Sensation Seekers –Vicarious Exploration Buying on Impulse/Impulse Purchases –Intense feeling –Disregard negative consequences –Euphoria/Excitement –Conflict between control vs. Indulgence –What impacted your last impulse purchase?

19. Consumer $ Saving Strategies

21. Under low-effort decision making, consumers often use performance tactics to choose a brand. This ad demonstrates that Tostitos Salsa Con Queso contains real cheese. The important feature of the brand is emphasized in the ad & packaging. Courtesy Frito-Lay, Inc.

22. Questions?