Chapter 8Judgment and Decision MakingBased on High Consumer

Chapter 8
Judgment and Decision Making
Based on High Consumer Effort
© 2013 Cengage Learning. All Rights Reserved. May not be
scanned, copied or duplicated, or posted to a publicly accessible
website, in whole or in part.

High-Effort Judgment Processes
Estimation of likelihood
Goodness/badness
Anchoring/adjustment
Imagery
Conjunctive probability assessment
Illusory correlation
Perceived Attribute Correlations: Real and Imagined
Conjunctive probability assessment - Estimate whether two
events occur simultaneously
Illusory correlation: Are oranges with big navels really better?

Is there a correlation between behavior and gifts received- or is
the relationship illusory?

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‹#›
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

Usage-Context
High-Effort
Deciding what offerings to choose
Thought-based decisions
Brands
Product attributes
Gains & losses
Feeling-based decisions
Appraisals & feelings
Affective forecasts

High-Effort
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
Compensatory Model
Compensatory Model of Choice – consumers analyze each
alternative in a broad evaluative fashion so that high ratings on
one attribute may compensate for low ratings on other
attributes.
Compensatory Models are generally used in a high involvement
purchase decision.

Compensatory Attribute Processing Models
Additive Difference Model
Brands compared by attribute, two at a time
Differences added up as decision maker proceeds by attribute;
e.g.:EpsonCanonDiffPrice330Weight34-1Processor550Battery
Life13-2After Sales Support330Display Quality330TOTAL-3
(Canon is better)

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Evaluative criteria
Epson
Canon
Compaq
Samsung
IBM
Toshiba
Importance
Price
5
3
3
4
2
1
30
Weight
3
4
5

4
3
4
25
Processor
5
5
5
2
5
5
10
Battery life
1
3
1
4
1
5
05
After-sale support
3
3
4
3
5
3
10
Display quality
3
3
3
5
3
3
20

evaluations: 1 = very poor; 5 = very good
Or belief strengths: –3= very weak; +3= very strong if stated in
terms of attribute level
(e.g., low price, light weight, long battery life, etc.))
Different Choices, Depending on Different Decision Rules
Decision Rule
Brand Choice
Compensatory
Samsung
Conjunctive
Canon
Disjunctive
Toshiba
Lexicographic
Epson
EBA
Samsung
Compensatory Model:
Score for Samsung Score for Epson
30 * 4 = 12030 * 5 = 150
25 * 4 = 10025 * 3 = 75
10 * 2 = 2010 * 5 = 50
05 * 4 = 2005 * 1 = 05
10 * 3 = 3010 * 3 = 30
20 * 5 = 10020 * 3 = 60
____ ____
390 370
Evaluation
Evaluations of brands as good or bad based on information
retrieved from memory or generated through external search.
Importance weights based on needs, values, goals, problem
recognition

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‹#›
Compensatory Models
Help us understand why a decision was made
Can identify strengths and stress in communications
Can identify weaknesses alter product, and communicate
changes

Noncompensatory Models
Noncompensatory Models of Choice (Hierarchical) – high
ratings on some attributes may not compensate for low ratings
on other attributes
Typically lower involvement than compensatory

Noncompensatory Brand
Processing Models
Conjunctive Models (Weight on Negative Info)
Minimum cutoffs set for each attribute (reject if below cutoff)
Need additional rule to rule out remaining alternatives (if more
than one)
Disjunctive Model (Weight on Positive Info)
Acceptable levels for attributes decided (reject if below cutoff)
Decision based on several, but not all, important attributes
16

‹#›
Noncompensatory Attribute Processing Models
Lexicographic Model
Attributes ordered by importance
If one alternative dominates that attribute, it is chosen;
otherwise, proceed to next most important attribute
I want to get brand that does best on attribute(s) most important
to me.
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.

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‹#›
Cognitive Choice Models

Phased Strategy
Phased Strategy – consumers sequentially used two
noncompensatory or use a noncompensatory model and then a
compensatory approach.
Typically used in a high involvement situation.
Which Models Do Consumer use the Most?
Lexicographic – 60.7%
Multiattribute – 32.1%
Phased – 5.4%
Others – 2.4%

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

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? Endowment effect
Affective Decision Making

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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

Stimulating Imagery
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
Two 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
Information Availability

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

Chapter 9
Judgment and Decision Making
Based on Low Consumer Effort

Shortcuts in Making Low-Effort Judgments
A heuristic is a “rule of thumb” to simplify things
Representativeness heuristic: Comparing a stimulus with the
category prototype/exemplar
Availability heuristics: Basing judgments on events that are
easier to recall
Base-rate information
Law of small numbers

Availability Heuristics
Base-rate Heuristics – We base our judgment on information
that is memorable or the most dramatic.
Do weight loss pills work for most people?
Will this exercise machine make me happy?
This judgment is not based on actual or typical results, but is
based on the results that are the most striking
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
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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

Simplifying Strategies
Satisficing – When a consumer is willing to accept “good
enough” rather than the “best.”
Low-involvement consumer look for ways simplify or reduce
effort required for purchase decision
Choice tactics – quick and easy rules of thumb (heuristics) that
guide purchase decision.

Consumer Learning Process
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
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

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)

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

2. Habit
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
Marketing to Habitual Purchasers of other Brands

3. Brand Loyalty
Brand/Multibrand Loyalty
Purchase pattern + commitment to brand
Cognitive lock-in
Resistant to competitive efforts
Quality/Satisfaction

Quality for Brand Loyalty
4. Price
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
Pricing Strategies -Value
Value – Two ways to provide value: 1) Lower price for same
benefits 2) Provide more or better benefits for same price
Example – Orange Juice & Orange Juice with Calcium.
Digiorno – is it just like delivery?

Pricing Strategies –Special Pricing
Special Pricing – usually a temporary lowering of price.
Sale: The price is simply lower than normal
Rebate: The price is the same and the consumer is required to
take action to receive money back after purchase
Coupon: Price is lowered when coupon is offered by consumer,
usually at time of purchase.

Dangers of Special Pricing
If sale is offered too much consumer no longer views it as
special pricing.
Coupons tend to create coupon addicts or simply lowers price
for existing customers.
Rebates may not be effective for consumer who feel they won’t
use them.
Everyday Low Pricing (EDLP) Wal-Mart coined the term to
reduce problems of special pricing.

Pricing Perceptions
When the largest denomination changes consumer views this as
a larger price difference than lower denominations.
Example: $5.00 to $4.99 is perceived to be larger drop in price
than $5.02 to $5.00.
Some research has shown that consumers respond favorably to
odd pricing such as $9.87 or $7.63 versus $9.90 or $7.60.
Pricing
Zone of Acceptance – a range of prices that are acceptable for
products. Too high or too low and consumers feel value is
compromised.
Variability in Price perception – Economy affects our view of
prices. Is $3.85 a good price for a gallon of gas?

5. Normative Influences
Others can influence consumers’ low-elaboration decision
making
Normative Influences
Direct
Vicarious
Indirect

6. Feelings/Affect
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

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?
Variety Seekers

Chapter 17
Marketing, Ethics, and Social
Responsibility in Today’s
Consumer Society

Social and Temporal Dilemmas

Addictive Behavior
Usually brought on by chemical dependency
Perceived or chemical dependence on product or activity
Repeated use of product, even if dangerous
Can be harmful to addicts & those around them
Examples: cigarettes, drugs, alcohol, Internet use (facebook,
instagram), gambling, video games, etc.
You can be addicted to shopping, online shopping, and other
marketplace endeavors

Compulsive Behavior
Compulsive consumption
Strong emotional component
Compulsive buyers have low self-esteem
How is impulsive consumer behavior different than compulsive
cb?
Consumer Theft
Prevalence
Retail: $37 billion losses
Nonretail: fraud; pirarcy
Psychological factors affecting
Temptation to steal
Ability to rationalize behavior

Motivations for Theft

Black Markets
Example: Cuban Cigars
Legal items in short supply
Brands
Illegal items
What are some examples of products on the black market and
are they still “marketed”?
“…situations in which consumers pay (often exorbitant
amounts) for items not readily available…sellers are
unauthorized.”
Black Markets

Advertising to Children~ Issues
Did you watch a lot of TV as a child? Did it impact you
positively or negatively?
Issues:
Undeveloped cognitive abilities
Unable to store/retrieve information in long-term memory
Prey on needs
Teach children materialism, act on impulse, immediate
gratification
Do not understand cost
Host selling
Types of products

Marketing Implications
Does marketing perpetuate materialism?
Makes acquisition attractive and convenient
Does marketing encourage addictive and compulsive acquisition
behaviors?
Promotes unhealthy behaviors, such as smoking
How can marketers deal with consumer theft?
Antitheft devices and improved security systems
Reducing ability to serve customers
What would you as a marketer/businessperson do regarding
theft from your business?

Advertising to Children~
Solution
s

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