1. 1 Ravi Vatrapu vatrapu@cbs.dk Online Consumer Psychology: Decision-Making H ENRY, P. (2005). Is the Internet Empowering Consumers to Make Better Decisions, or Strengthening Marketers' Potential to Persuade? Chapter 16 of Online Consumer Psychology Textbook. Course Portal: http://www.itu.dk/~rkva/2011-Spring-EB22http://www.itu.dk/~rkva/2011-Spring-EB22 Facebook: http://www.facebook.com/group.php?gid=133258548012http://www.facebook.com/group.php?gid=133258548012 Etherpad: http://ietherpad.com/7y3drhMCnqhttp://ietherpad.com/7y3drhMCnq Thursday, 10-Feb-2011 EB22: Online Marketing: Lecture 04 Auditorium 4, ITU, Copenhagen, Denmark

2. Two Themes  Is the Internet  Empowering Consumers’ Decision-Making?  Strengthening Marketers’ Persuasion Potential? 2

3. Henry’s Central Claim “Despite the impact of innovation on media alternatives, we must realize that we are faced with human characteristics that remain constant over time.” (p. 346) 3

4. Henry’s Four Skepticisms 1.Enhanced Decision Capability 2.Search Patterns 3.New Decision Strategies 4.Consumer Empowerment 4

5. Human Information Processing  Information Overload  “Single-Feature Responding”  From “product orientation” to “marketing orientation”  Online Heath information example  Constraining Factors  Limits to Human Information Processing  Limited Time  Expanded Information  More Cognitive Effort  Increased Choice but decreased perception of power 5

6. H UMAN D ECISION -M AKING  Information presentation and communication requirements  Financial Decisions  Kahneman & Tversky’s Prospect Theory  Decision-Making Heuristics  Habitual Repurchase  Most well-known brand  Price as proxy for quality  Third party opinions (experts, friends, trusted others) “Short-cuts have utility” (p. 354) 6

7. H UMAN C OGNITIVE V ARIABILITY  Different Cognitive Characteristics  Knowledge  Skills  Abilities “Access is only empowering if one has these prerequisite skills” (p. 354) Visual vs. Textual 7

8. T ECHNOLOGY C YCLES  Increased Time Pressure  Expanded Access to Information  Greater Range of Choice  Human Cognitive Limitations  Technology cycles that results in the default shortcut to reliance on expert opinion 8

9. H ENRY ’ S C LAIM If this approximates reality, then the Internet will not change the basic decision strategies, nor it will lead to substantial knowledge enhancement.” (p. 356, emphasis mine) 9

10. R ECOMMENDATIONS Understanding of Consumers’ Decision-Making Processes  Involvement with the category  Identification of current information-search patterns  Alternative evaluation criteria  Duration of the decision process 10

11. T HREE A PPROACHES TO D ECISION -M AKING I NSIGHTS 1.Expert questioning  Form a panel of prospective customers  Facilitate expert questioning sessions 2.Guided Recall  Category need identification  Subsequent product purchase processes and outcomes 3. Triadic sorting Sets of three product alternatives Select one that is most different than the other two 11

12. Discussion 12