1. © 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. Chapter 8 Judgment and Decision Making Based on High Consumer Effort

2. © 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. Learning Objectives~ Ch. 8 1.Distinguish between judgment and decision making, and indicate why both processes are important to marketers. 2.Explain how cognitive decision-making models differ from affective decision-making models and why marketers are interested in both types of models. 3.Identify the types of decisions faced by consumers in high-effort situations and discuss how marketers can try to influence these decisions. 4.Outline the ways that consumer characteristics, decision characteristics, and other people can influence high-effort decisions.

3. © 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

4. © 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. 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?

5. © 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 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

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

7. © 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 Consumer Decisions~3 Deciding whether to make a decision now –Decision delay Deciding when alternatives cannot be compared

8. © 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 Decision Making Processes Consideration set Inept set Inert set What are the differences among these sets?

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

10. © 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. 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?

11. © 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. 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.)

12. © 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. 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

13. © 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 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

14. © 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. 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

15. © 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. Contextual Effects on Consumer Decision Making Consumer characteristics Task characteristics Task definition/framing Presence of a group

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

17. © 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. Task Characteristics Affecting Decision Making Information availability Information format Trivial attributes

18. © 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. 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