5-(IV)in what ways do consumers stray from rational decision process
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This document summarizes different ways that consumer decision making can stray from rational deliberation. It discusses low involvement peripheral decision making, variety-seeking behavior, and concepts from behavioral decision theory and behavioral economics like heuristics, framing, and mental accounting. Specifically, it explains how consumers use heuristics like availability and representativeness, how framing can influence choices, and how mental accounting involves categorizing financial options in non-logical ways like integrating small gains with large losses.
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5-(IV)in what ways do consumers stray from rational decision process
- 1. In what way do consumers stray from a deliberative , rational decision process?
- 2. Low involvement consumer decision making Consumers make decisions in both low and high involvement circumstances Central route is a high involvement situation where consumer makes rational decision Peripheral route is a low involvement situation where consumer’s decision may be influenced by peripheral cues
- 3. Variety-seeking buying behaviour This is a low involvement behaviour, characterised by significant brand differences. Acc. To this concept , brand switching takes place a lot. Eg. When you buy cookies without much brand evaluation
- 4. Behaviour Decision Theory and Behavioural Economics Behaviour decision Theory proves that consumer behaviour is very constructive and context of decisions really matters. Behavioural Economics involve- Decision heuristics Framing Mental Accounting
- 5. Decision Heuristics Availability heuristic Prediction based on the quickness and ease with which an example comes to mind representative ness heuristic Prediction based on how similar the outcome is to other examples , like different packing of dif. brands Anchoring & Adjustment heuristic Initial judgement followed by adjustment based on further info.
- 6. Framing Decision framing is the process by which choices are presented to and interpreted by the consumer. Eg. a Rs. 20000/- phone may not feel expensive among Rs. 40000 phones , but very expensive among Rs. 5000 phones Marketers use choice architecture-the environment in which decisions are made- to influence choices
- 7. Mental Accounting It refers to the way consumers categorize and evaluate financial choices. Especially used when there is no logical basis for the categorisation.
- 8. Mental accounting basis Segregate grains Listing benefits of a large industrial product can make the sum of the parts greater than the whole Integrate losses There is advantage in selling something if its cost can be added to another large purchase Consumers tend to-
- 9. Mental accounting basis Integrate small gains with larger losses See the popularity of rebates on big- ticket purchases Consumers tend to- Integrate smaller losses with larger gains Eg. When taxes are withheld from monthly paychecks
- 10. Thank you for watching!!
- 11. UPLOADED BY SHREYANS DAGA, MNIT JAIPUR DURING AN INTERNSHIP BY PROF. SAMEER MATHUR,IIM LUCKNOW Visit www.iiminternship.com Disclaimer