Cognitive habitual affective decision making

Chapter 9:

DECISION MAKING

CHAPTER OBJECTIVES

When students have finished reading this chapter, they should understand why:

1. The three categories of consumer decision-making are cognitive, habitual, and affective.

2. A cognitive purchase decision is the outcome of a series of stages that results in the selection of one product over competing options.

3. The way information about a product is framed can prime a decision even when a consumer is unaware of this influence.

4. We often rely upon “rules-of-thumb” to make routine decisions.

5. Marketers often need to understand consumers’ behavior rather than a consumer’s behavior.

6. The decision-making process differs when people chose what to buy on behalf of an organization rather than for personal use.

7. Members of a family unit play different roles and have different amounts of influence when the family makes purchase decisions.

Chapter SUMMARY

The three categories of consumer decision-making are cognitive, habitual, and affective.

Consumer decision-making is a central part of consumer behavior, but the way we evaluate and choose products (and the amount of thought we put into these choices) varies widely, depending on such dimensions as the degree of novelty or risk related to the decision. Perspectives on decision-making range from a focus on habits that people develop over time to novel situations involving a great deal of risk in which consumers must carefully collect and analyze information before making a choice. Many of our decisions are highly automated; we make them largely by habit. The way we evaluate and choose a product depends on our degree of involvement with the product, the marketing message, and/or the purchase situation. Product involvement can range from very low, where purchase decisions are made via inertia, to very high, where consumers form very strong bonds with what they buy.

A cognitive purchase decision is the outcome of a series of stages that results in the selection of one product over competing options.

A typical decision involves several steps. The first is problem recognition, when we realize we must take some action. Once the consumer recognizes a problem and sees it as sufficiently important to warrant some action, he or she begins the process of information search. In the evaluation of alternatives stage, the options a person considers constitute his or her evoked set. Members of the evoked set usually share some characteristics; we categorize them similarly. The way the person mentally groups products influences which alternatives she will consider, and usually we associate some brands more strongly with these categories (i.e., they are more prototypical). When the consumer eventually must make a product choice from among alternatives, he uses one of several decision rules. Noncompensatory rules eliminate alternatives that are deficient on any of the criteria we’ve chosen. Compensatory rules, which we are more likely to apply in high-involvement situations, allow us to consider each alternative’s good and bad points more carefully to arrive at the overall best choice. Once the consumer makes a choice, he or she engages in post purchase evaluation to determine whether it was a good one; this assessment in turn influences the process the next time the problem occurs.

The way information about a product is framed can prime a decision even when the consumer is unaware of this influence. When consumers process product information, they don’t do it in a vacuum. They evaluate its attributes in terms of what they already know about the item or similar product.

We often rely upon “rules-of-thumb” to make routine decisions.

In many cases, people engage in surprisingly little search. Instead, they rely on various mental shortcuts, such as brand names or price, or they may simply imitate others’ choices. We may use heuristics, or mental rules-of-thumb, to simplify decision-making. In particular, we develop many market beliefs over time. One of the most common beliefs is that we can determine quality by looking at the price. Other heuristics rely on well-known brand names or a product’s country of origin as signals of product quality. When we consistently purchase a brand over time, this pattern may be the result of true brand loyalty or simply inertia because it’s the easiest thing to do. Principles of mental accounting demonstrate that the way a problem is framed and whether it is put in terms of gains or losses influences what we decide.

Marketers often need to understand consumers’ behavior rather than a consumer’s behavior. More than one person actually makes many purchasing decisions. Collective decision-making occurs whenever two or more people evaluate, select, or use a product or service. In organizations and in families, members play several different roles during the decision-making process. These roles include the gatekeeper, influencer, buyer, and user.

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Organizational buyers are people who make purchasing decisions on behalf of a company or other group. Although many of the same factors that affect how they make decisions in their personal lives influence these buyers, their organizational choices tend to be more rational. They are also likely to involve more financial risk, and as they become more complex, it is probable that a greater number of people will be involved in making the decision. The amount of cognitive effort that goes into organizational decisions relates to internal factors, such as the individuals’ psychological characteristics, and external factors, such as the company’s willingness to tolerate risk. One of the most important determinants is the type of purchase the company wants to make: The extent of problem solving required depends on whether the product or service it procures is simply a reorder (a straight rebuy), a reorder with minor modifications (modified rebuy), or something it never bought before or something complex and risky (new task). Online purchasing sites revolutionize the way organizational decision makers collect and evaluate product information in business-to-business (B2B) e-commerce.

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Marketers have to understand how families make decisions. Spouses in particular have different priorities and exert varying amounts of influence in terms of effort and power. Children are also increasingly influential during a widening range of purchase decisions.

Chapter Outline

I. What’s Your Problem?

Researchers realize that decision makers actually possess a repertoire of strategies. We use a thought process called constructive processing to evaluate the effort we will need to make a decision and then tailor our cognitive effort to the task. In some cases we may create a mental budget to help us make estimates over time. Figure 9.1 reveals three types of decision-making: cognitive, habitual, and affective.

A. Consumer Hyperchoice forces us to make decision that may drain energy, while decreasing our abilities to make smart choices.

B. When we attempt to change or maintain our actions, we begin to self-regulate. We specify in advance how we want to respond to issues. These implementation intentions might dictate how much weight we give to information, might include a timetable for decision making.

C. Consumers might exaggerate the benefits or negative aspects of a choice if it will interfere with the ultimate goal, in a process known as counteractive construal.

D. Our ability to self-regulate changes over time, especially when we are tired. The morning morality effect shows that people are more like to cheat or lie in the afternoon than in the morning. The part of the brain called the executive control center, where important decisions are make, can be distracted when we work on other simple tasks.

*****Use Figure 9.1 Here *****

Discussion Opportunity—Ask students to think of products that they use that pose a risk. Ask: How does this risk affect your decision-making? Try to think of products that have a social risk. What are they? What products have you not used because of the risk? How could marketers of these products overcome this risk function and get you to use their products?

II. Cognitive Decision-Making

A. Steps in the Cognitive Decision-Making Process

*****Use Figure 9.2 Here *****

1. Step #1: Problem recognition. Problem recognition occurs when we experience a significant difference between our current state of affairs and some state we desire. Figure 9.3 illustrates the shifts in actual and ideal states.

Discussion Opportunity—Provide an illustration that demonstrates the actual and ideal states. Demonstrate how a gap between the two can occur.

*****Use Figure 9.3 Here *****

Discussion Opportunity—Ask: How do sellers convince you that you have a problem that they can solve?

2. Step #2: Information search. Information search is the process by which we survey the environment for appropriate data to make a reasonable decision.

· Consumers differ in the amount of search they tend to undertake.

· Cybermediaries help consumers to filter and organize online market information so that customers can identify and evaluate alternatives more efficiently. Intelligent agents are sophisticated software programs that use collaborative filtering technologies to learn from past user behavior in order to recommend new purchases.

· Figure 9.4 illustrates the relationship between amount of information search and product knowledge.

*****Use Figure 9.4 Here *****

3. Step #3: Evaluation of alternatives. We call the alternatives a consumer knows about the evoked set and the ones he or she seriously considers the consideration set.

· How do people put products into categories? We cognitively represent information in a knowledge structure, a set of beliefs we organize in our minds. We represent a product in a cognitive structure at one of three levels: basic, superordinate, subordinate. Figure 2.8 illustrates this.

· Basic level category—typically most useful; items have a lot in common but broad range of alternatives can be considered.

· Superordinate category—abstract concepts.

· Subordinate level—individual brands; prototypical items help describe subordinate level.

· Product categorization has many strategic implications. Some of these are:

a. Position a product—The conception of the product relative to other products in the consumer’s mind, or positioning strategy, hinges on the extent to which the consumer categorizes a product.

b. Identify competitors— Do different products act as substitutes?

c. Create an exemplar product— The most known, accepted product or brand can be a category exemplar that exerts disproportionate influence on how people think of the category.

d. Locate products in the store—Consumers often expect to find certain products within certain places within the store environment.

· Evaluative criteria are the dimensions we use to judge the merits of competing options. Determinant attributes are the features we actually use to differentiate among our choices.

4. Step #4: Product choice. In this stage the consumer decides. There are decision rules that may guide our choices. Simple decision rules are non-compensatory decision rules, meaning a product with a low standing on one attribute cannot make up for this position by being better on another attribute. Rules within this structure can be:

· The lexicographic rule —the brand with the best attribute is selected.

· The elimination-by-aspects rule —must have a specific feature to be chosen.

· The conjunctive rule —the consumer processes products by brand. Cutoffs are established for each brand. Failure to meet one cutoff means the brand will be rejected.

Discussion Opportunity—Provide an example of how you could use a non-compensatory decision rule. How could a marketer deal with this if you were not selecting their brand?

5. Step #5: Post purchase evaluation. Post purchase evaluation occurs when we experience the product or service we selected and decide whether it met our expectations. Our reaction is consumer satisfaction or dissatisfaction. According to the expectancy disconfirmation model, we form beliefs about product performance based on our prior experience with the product or communications about the product that imply a certain level of quality. If the experience matches our beliefs, we are satisfied. If not, we are dissatisfied.

B. Neuromarketing uses functional magnetic resonance imaging (MRI) to track blood flow in the brain as we respond to marketing messages and design features. Marketers hope to increase their understanding of response in order better market products.

C. Online Decision Making

1. A cybermediary, or web site, can help consumers better organize information about a good or service. Intelligent agents are software programs that use collaborative filtering technologies to learn a consumer’s past behavior, and recommend new purchases based on that behavior.

2. Search engine optimization refers to the procedures companies use to design content for web sites and post. This will maximize the likelihood that their content will show up when someone searches for a related term.

a. A meta tag is a code embedded in a web page and is only visible to consumers in the source code.

b. A title tag is an HTML tag that defines the page’s title.

c. The heading tag is used to section and describe contents.

d. A title indicates the pages contents. Titles are used as hooks that increase the likelihood people will click on it. The development of strong titles is referred to as linkbaiting.

III. How Do We Put Products Into Categories?

A. Hybrid products feature characteristics from two distinct domains. Thus we have a Crossover Utility Vehicle (CUV) and a Sports Utility Vehicle (SUV).

B. Knowledge structure, this term refers to a set of beliefs and the way we organize these beliefs in our minds.

*****Use Figure 9.5 Here *****

C. Evaluate criteria and dimensions. We use to judge the merits of competing options while determinant attributes are features we actually use to differentiate among choices. Positioning strategy is the market’s ability convince the consumer to consider its product within a given category, such as televisions, or desserts. This is accomplished by identifying competitors, creating an exemplary product and having strong product placement within the store.

E. Consumers used evaluative criteria to judge the merits of competing options. Consumers consider where products differ, and well as how they are similar. The determinant attributes are the ones we actually use in making our choices.

1. The compensatory rule allows a product to make up for its shortcomings in one area by excelling in another area.

2. The simple additive rule leads to the option that has the most positive attributes. The weighted additive rule allows the consumer to consider the relative important of attributes by weighting each one.

3. When we make habitual or emotional purchases, use typically use a noncompensatory rule. If an option doesn’t suit us, we just reject it and move on to something else.

· The lexicographic rule says we should select the brand that is best in the area of the most important attributes.

· The elimination-by-aspects rules is similar to the lexicographic rule, but allows us to impose specific cut-offs.

· The conjunctive rules allow consumers to process by brand.

*****Use Table 9.1 Here *****

IV. Habitual Decision-Making

Habitual decision-making occurs with little to no conscious effort.

Ask students if they’ve made a snap judgment that turned out to be correct before.

A. Priming and Nudging

Priming refers to environmental cues that influence us. A nudge is a subtle change that influences behavior. The default bias refers to a tendency for people to comply with a requirement rather than to make the effort not to comply.

B. Decision-making Biases and Shortcuts

We can distinguish between a decision strategy that seeks to deliver the best possible result (maximizing) and one that yields an adequate solution and minimizes decision-making costs (satisficing). The idea that we will settle for a solution that is good enough because we lack the resources to weigh every possible factor is called the bounded rationality perspective on decision-making. Mental accounting helps to explain the way we post a problem (called framing) and whether it is phrased in terms of gains or losses influences our decision. The sunk-cost fallacy says that having paid for something makes us reluctant to waste it. Behavioral economics blends psychology and economics to study how consumers make decisions. Loss aversion says that people put more emphasis on loss than on gain in a situation. Prospect theory defines choice in terms of gains and losses.

Discussion Opportunity—Ask: What biases do you have when you search for (a) a car, (b) a computer, and (c) a university or college?

C. Heuristics: Mental Shortcuts

1. Covariation means that we tend to assume certain attributes covary. For instance, we may believe that a clean car is in good mechanical condition.

2. Country of origin is a determinant attribute in the decision-making process.

a. Consumers strongly associate certain items with specific countries and products from those countries benefit from these linkages.

b. The tendency to prefer products or people of one’s own culture over those from another country is called ethnocentrism.

*****Use Table 9.2 Here *****

3. Familiar brand names is a short cut.

4. Higher prices may indicate higher quality.

Discussion Opportunity—Ask: What stores do you like to go to because you like the salespeople? What do you like about them? What are some of the stores you hate to shop at because of the salespeople? How do they make you feel? What specifically do you not like about them? What would you do to correct the situation if you were the management of the store?

V. Collective Decision Making

A. Roles in Collective Decision-Making

When more than one person is involved in the purchasing process for products or services that may be used by multiple consumers, it is called collective decision-making. A number of specific roles are played when a collective decision must be made, either by members of a household or by individuals in an organizational buying center.

· Initiator—the person with the idea or need.

· Gatekeeper—the person who controls the flow of information to the group.

· Influencer—the person who tries to sway the outcome of the decision.

· Buyer—the one who makes the decision.

· User—the person who winds up using the product.

B. B2B Decision-Making

1. Organizational buyers are people who purchase goods and services on behalf of companies for use in the process of manufacturing, distribution, or resale. These individuals buy from business-to-business (B2B) marketers, who specialize in meeting the needs of such organizations as corporations, government agencies, hospitals, and retailers.

2. The organizational buyer’s perception of the purchase situation is influenced by a number of factors:

· Expectations of the supplier.

· The organizational climate of his/her own company.

· The buyer’s assessment of his/her own performance.

3. How does organizational decision-making compare to consumer decision-making?

· Purchase decisions frequently involve many people.

· Products are often bought according to precise, technical specifications.

· Impulse buying is rare.

· Decisions are often of high risk.

· Dollar volume of purchases is often substantial.

· There is more emphasis on personal selling than on other types of promotion.

Discussion Opportunity—Ask: How are decisions made by organizations and decisions made by individuals the same? How are they different? How are strategies the same? Different?

4. Typically, complex organizational decisions tend to be made by a group of people (members of a buying center) who play different roles in the decision.

5. The classification scheme, which divides organizational buying decision-making into three types is called the buyclass theory of purchasing. These range from the most to the least complex Dimensions are:

· The level of information that must be gathered prior to making a decision.

· The seriousness of all possible alternatives.

· The buyer’s familiarity with the purchase.

6. The types of decisions in the buyclass framework include:

· A straight rebuy is like a habitual decision. This is an automatic decision (as in an inventory reorder).

· A modified rebuy situation involves limited decision-making. This is a repurchase with some minor modifications.

· A new task involves extensive problem solving. This decision has not been made before and is usually a team decision.

Discussion Opportunity—Ask students to give examples of products that would be classified as straight rebuys, modified rebuys, and new task products for a business organization. Use any example organization to illustrate your descriptions.

Use Table 9.3 here

7. A prediction market is an outgrowth of the wisdom of crowds phenomenon. This approach asserts that groups of people with knowledge about an industry collectively are better than any are as individuals. In a prediction market framework, companies empower their employees as traders. The traders place bets on what they think will happen with future sales, new products, and so on.

VI. The Family Decision-Making

Discussion Opportunity—Ask: Describe your family structure. Would you say that it is traditional? What impact does your family structure have on purchasing? How could an advertiser design an ad to appeal to your family? What would be in that ad?

Discussion Opportunity—Ask students to write down their definition of “family.” Compare the answers with the rest of the class. How does this definition match with alternative lifestyles?

Discussion Opportunity—Ask: Why is it important for marketers to know how to define a family? What difference does it make to an e-marketer?

*****Use Consumer Behavior Challenge #45 Here *****

Discussion Opportunity—Watch TV (or read a TV Guide) for a week. List and describe the various ways families are depicted. Are these realistic depictions or not? Explain.

A. In a consensual purchase decision, the group agrees on the desired purchase, differing only in terms of how it will be achieved. In an accommodative purchase decision, group members have different preferences or priorities and cannot agree on a purchase that will satisfy the minimum expectations of all involved.

Discussion Opportunity—Provide an illustration from your family where consensual purchase decisions and accommodative purchase decisions occurred. Which form is the most normal?

B. Conflict occurs when there is not complete correspondence in family members’ needs and preferences. There are specific factors that determine how much family decision conflict there will be.

· Interpersonal needs – a person’s level of investment in the group

· Product involvement and utility – the degree to which a person will use the product to satisfy a need

· Responsibility – for procurement, maintenance, payment, etc.

· Power – the degree to which one family member exerts influence over the others

1. Researchers have paid special attention to which spouse plays the role of what has been called the family financial officer (FFO), who keeps track of the family’s bills and decides how any surplus funds will be spent.

Discussion Opportunity—Ask: What might a marketing firm do to discover who the FFO is in a family? What strategies might be used to reach this person? Why is the role of the FFO changing over time?

C. Family members construct a family identity that defines the household to members and insiders using rituals, narratives, and interactions to maintain structure, character, and clarify members’ relationships to one another.

D. The family unit is a set of customer networks that invest in products and services to reach collective identity goals, recognizing that these pursuits may compete with rather than complement individual interests.

There are several sex roles that affect decision-making responsibilities. The number of helicopter moms, overprotective mothers who hover around their kids and insert themselves into their lives, is on the rise.

E. Marketers apply the family life cycle (FLC) concept to segment households.

a. The FLC combines trends in income and family composition with the changes these demands place on income.

b. As we age, our preferences and needs tend to change.

c. Four variables are useful for describing these changes: 1) Age, 2) Marital status, 3) Presence or absence of kids in the home, and 4) Ages of children, if present.

Discussion Opportunity—Ask: Are there other areas that you believe cause conflict in family units? What do these variables depend on (such as who is involved)? How can marketers use knowledge of conflict in their marketing strategy? Can you think of any products that are designed to enhance conflict? Reduce it? Explain.

d. When one family member chooses a product, it is an autonomic decision. Syncretic decisions involve both partners.

e. Sheconomy is an analyst term for women dominating emerging markets. In the US, the gender revolution is developing into gender convergence, in which there are more similarities between American men and women than differences.

Discussion Opportunity—Ask: In the traditional family, who generally makes the decision to buy a car? A computer? A couch? A vacation?

Discussion Opportunity—Ask: Would you suspect more syncratic decisions in today’s society by a family unit? If not, explain why.

f. Working mothers often struggle with what one researcher calls the juggling lifestyle, or a frenzied, guilt-ridden compromise between conflicting cultural ideals of motherhood and professionalism.

g. Cultural background plays a big role in whether husbands or wives control purchase decisions. Four factors appear to determine the degree to which decisions will be made jointly or by one or the other spouse. They are:

· Sex-role stereotypes—men buy masculine products and females buy feminine products.

· Spousal resources—the spouse who contributes the most has the greater influence.

· Experience—time constraints and expertise establishes one decision maker.

· Socioeconomic status—middle-class families make more joint decisions.

h. Despite recent changes in decision-making responsibilities, women still are primarily responsible for the continuation of the family’s kin-network system. They perform the rituals intended to maintain ties among family members.

i. The synoptic ideal calls for the husband and wife to take a common view and act as joint decision makers.

Discussion Opportunity—Ask students to consider what heuristics couples use to make decisions. Give an example of a typical situation.

Discussion Opportunity—Have students think of an individual who has power over them. On

1. Group shopping can change an individual consumer’s behavior. The general effect of group behavior on individual behavior is that the identity of the individual is submerged in a group, known as de-individualization. Home shopping parties capitalize on group pressures to boost sales. Pressures to conform may be particularly intense and may escalate as more and more group members begin to “cave in” – the bandwagon effect .

*****Use Consumer Behavior Review #13 and Challenge #57 Here *****

Discussion Opportunity—Ask: Have you ever gone shopping with a group of people your own age? Do you remember buying (or encouraging others to buy) something that you probably would not have if you were alone? Did you take it back, give it away, or throw it away? Did a group ever dissuade you from buying something you wanted? Did you go back later by yourself and make the purchase?

End-of-Chapter Support Material

SUMMARY OF SPECIAL FEATURE BOXES

1. CB As I See It: Wendy Liu, University of California, San Diego

One of the most difficult tasks for consumers is to exert self-control. Recent research has found that not all plans are created equal. Some planning activities facilitate self-control, and others actually hinder self-control efforts.

2. The Tangled Web

Research has found that when you focus on your friends, you feel better. The boost in self-esteem prompts us to lose self-control and engage in impulsive behaviors such as binge eating or reckless spending.

3. Marketing Pitfall

Product labels assist us with problem-solving but some are more useful than others. This box illustrates some less than useful labels.

4. CB As I See It: Frederic Brunel, Boston University

When competitors match each other on product features, quality, and price, the distinguishing feature often becomes a superior visual product design.

5. Marketing Opportunity

Consumers want to know the origin of products. Product authenticity is becoming a determinant attribute.

6. Marketing Opportunity

Many products originate from employee and customer ideas. This concept is moving in to the apparel industry as consumers can now choose t-shirt designs, accessories, etc., using online technology.

7. The Tangled Web

Parents are monitoring what children see and post on social media sites such as Facebook.

8. The Tangled Web

Facebook can impact a couple’s relationship because the platform makes it easy to rekindle old relationships. Many divorces occur when partners find inappropriate messages on a Facebook wall, which then becomes evidence.

9. CB As I See It: Amber Epp, University of Wisconsin-Madison

When consumers make decisions, they are immersed in family relationships. Family is a main organizing force that shapes consumers’ choices and experiences.

REVIEW QUESTIONS

9-1. Why can “mindless” decision making actually be more efficient than devoting a lot of thought to what we buy?

Sometimes the decision-making process is almost automatic; we seem to make snap judgments based on very little information. At other times, coming to a purchase decision begins to resemble a full-time job. A person may literally spend days or weeks thinking about an important purchase such as a new home, even to the point of obsession. Mindless decision-making is more efficient because we do not waste time seeking information when the decision is not as important or we have previously made the decision.

(5 minutes, Chapter Objective 1, AACSB: Reflective Thinking)

9-2. List the steps in the model of cognitive decision-making.

Problem recognition, information search, evaluation of alternatives, product choice, and outcomes.

(5 minutes, Chapter Objective 2, AACSB: Reflective Thinking)

9-3. What is purchase momentum, and how does it relate (or not) to the model of rational decision-making?

Purchase momentum occurs when these initial impulses actually increase the likelihood that we will buy even more (instead of less as our needs are satisfied), as if we are “revved up” and plunged into a spending spree. It does not follow the traditional model of cognitive decision making because there is less time for information search and evaluation of alternatives, and the act of buying something else helps trigger the need recognition.

(5 minutes, Chapter Objective 3, AACSB: Reflective Thinking)

9-4. Give an example of the type of purchase that each of the three types of decision-making – cognitive, habitual, and affective - would most likely explain.

A cognitive decision is one that would involve rational thought such as choosing a new vacuum cleaner. Habitual decision-making is one that is made by habit such as making a repurchase of one’s favorite shampoo. Affective decision-making involves emotion – such as choosing a gift.

(5 minutes, Chapter Objective 1, AACSB: Application of Knowledge)

9-5. Name two ways a consumer problem arises.

1) A person’s standard of comparison may be altered, 2) the quality of the consumer’s actual state can move downward, and 3) the consumer’s ideal state can move upward.

(3 minutes, Chapter Objective 2, AACSB: Application of Knowledge)

9-6. Give an example of the sunk-cost fallacy.

Simply put, the sunk-cost fallacy occurs when someone has paid for something and is therefore reluctant to waste it. When someone attends a sporting event even though weather may put him or her at personal risk is an example.

(5 minutes, Chapter Objective 3, AACSB: Application of Knowledge)

9-7. What is prospect theory? Does it support the argument that people are rational decision makers?

Prospect theory, a descriptive model of how people make choices, finds that utility is a function of gains and losses, and risk differs when the consumer faces options involving gains versus those involving losses. Losses are perceived as more important than gains. This says that the factors of decision-making are relative. That would imply that we are not rational.

(5 minutes, Chapter Objective 3, AACSB: Reflective Thinking)

9-8. “Marketers need to be extra sure their product works as promised when the first introduce it.” How does this statement relate to what we know about consumers’ evoked sets?

People are more likely to add a new brand to the evoked set than one that we previously considered but passed over, even after additional positive information has been provided for that brand. For marketers, consumers’ unwillingness to give a rejected product a second chance underscores the importance of ensuring that it performs well from the time it is introduced.

(5 minutes, Chapter Objective 2, AACSB: Reflective Thinking)

9-9. Describe the difference between a superordinate category, a basic level category, and a subordinate category.

Categories exist in a taxonomy from most concrete to most abstract. The middle level, known as a basic level category, is typically the most useful in classifying products, because items grouped together tend to have a lot in common with each other but still permit a range of alternatives to be considered. The broader superordinate category is more abstract, whereas the more specific subordinate category often includes individual brands.

(5 minutes, Chapter Objective 2, AACSB: Reflective Thinking)

9-10. What is an example of an exemplar product?

If a product is a good example of a category, it is more familiar to consumers and they more easily recognize and recall it. Judgments about category attributes tend to be disproportionately influenced by the characteristics of category exemplars.

(5 minutes, Chapter Objective 2, AACSB: Reflective Thinking)

9-11. List three product attributes that consumers can use as product quality signals and provide an example of each.

1) Price: Consumers commonly associate a higher price as an indicator of a higher level of quality. 2) Country-of-origin: A common U.S. perception is that watches that are made in Switzerland are of a higher quality than watches made in any other country. 3) Brand name: Some brands have developed an image of quality (i.e., Mercedes Benz, Toyota, etc.) more so than others (i.e., Kia).

(10 minutes, Chapter Objective 3, AACSB: Application of Knowledge

9-12. How does a brand name work as a heuristic?

Branding is a marketing strategy that often functions, as a heuristic because people assume top brands can be trusted. People form preferences for a favorite brand, and then they literally may never change their minds in the course of a lifetime.

(5 minutes, Chapter Objective 3, AACSB: Reflective Thinking)

9-13. Describe the difference between inertia and brand loyalty.

Inertia exists when we buy a brand out of habit merely because it requires less effort. For brand loyalty to exist, a pattern of repeat purchase must be accompanied by an underlying positive attitude toward the brand. The underlying attitude makes the consumer less likely to switch in response to a promotion than if they simply behaved based on inertia.

(5 minutes, Chapter Objective 1, AACSB: Reflective Thinking)

9-14. What is the difference between a non-compensatory and a compensatory decision rule? Give one example of each.

Non-compensatory decision rules are choice shortcuts where a product with a low standing on one attribute cannot make up for this position by being better on another attribute. Unlike non-compensatory decision rules, compensatory decision rules give a product a chance to make up for its shortcomings. Consumers who employ these rules tend to be more involved in the purchase and thus are willing to exert the effort to consider the entire picture in a more exacting way. The willingness to let good and bad product qualities balance out can result in quite different choices.

(5 minutes, Chapter Objective 2, AACSB: Reflective Thinking)

9-15. What is prime? How does it differ from a nudge?

A prime is a stimulus that encourages people to focus on some specific aspect of their lives such as their financial well-being, or the environment. A nudge is a deliberate change by an organization that intends to modify behavior, and can result in dramatic effects.

(5 minutes, Chapter Objective 3, AACSB: Reflective Thinking)

9-16. What are some factors that influence how an organizational buyer evaluates a purchase decision?

A number of factors influence the organizational buyer’s perception of the purchase situation. These include his or her expectations of the supplier (e.g., product quality, the competence and behavior of the firm’s employees, and prior experiences in dealing with that supplier), the organizational climate of the company (i.e., how it rewards performance and what it values), and the buyer’s assessment of his or her own performance (e.g., whether he or she believes in taking risks).

(5 minutes, Chapter Objective 6, AACSB: Reflective Thinking)

9-17. What is a prediction market?

A prediction market is one of the hottest trends in organizational decision-making techniques. This approach asserts that groups of people with knowledge about an industry are, collectively, better predictors of the future than are any of them as individuals. In a prediction market framework, companies from Microsoft to Eli Lilly and Hewlett-Packard empower their employees as “traders.” Like a stock market, traders place bets on what they think will happen regarding future sales, the success of new products, or how other firms in a distribution channel will behave, —and they often receive a cash reward if their “stock picks” pan out.

(5 minutes, Chapter Objective 6, AACSB: Reflective Thinking)

9-18. Summarize the buyclass model of purchasing. How do decisions differ within each class?

The classic buyclass theory of purchasing divides organizational buying decisions

into three types that range from the least to the most complex. Three decision-making

dimensions describe the purchasing strategies of an organizational buyer. A straight rebuy is a habitual decision. It’s an automatic choice, as when an inventory

level reaches a preestablished reorder point. Most organizations maintain an

approved vendor list, and as long as experience with a supplier is satisfactory, there is

little or no ongoing information search or evaluation. A modified rebuy situation involves limited decision making. It occurs when an organization

wants to repurchase a product or service but also wants to make some minor

modifications. This decision might involve a limited search for information among

a few vendors. One or a few people will probably make the final decision. A new task involves extensive problem solving. Because the company hasn’t made a

similar decision already, there is often a serious risk that the product won’t perform as it should or that it will be too costly. This is when the organization designates a buying

center with assorted specialists to evaluate the purchase, and they typically gather a

lot of information before they come to a decision.

(10 minutes, Chapter Objective 5, AACSB: Reflective Thinking)

9-19. What are some of the ways in which organizational decisions differ within each class?

The purchase decisions that companies make frequently involve many people, including

those who do the actual buying, those who directly or indirectly influence this

decision, and the employees who will actually use the product or service. Organizations and companies often use precise technical specifications that require a lot of knowledge about the product category. Impulse buying is rare (industrial buyers do not suddenly get an “urge to splurge” on lead pipe or silicon chips). Because buyers are professionals, they base their decisions on past experience and they carefully weigh alternatives. Decisions often are risky, especially in the sense that a buyer’s career may ride on his judgment. The dollar volume of purchases is often substantial; it dwarfs most individual consumers’ grocery bills or mortgage payments. One hundred to 250 organizational customers typically account for more than half of a supplier’s sales volume, which gives the buyers a lot of influence over the supplier. B2B marketing often emphasizes personal selling more than advertising or other forms of promotion. Dealing with organizational buyers typically requires more face-to- face contact than when marketers sell to end consumers.

(10 minutes, Chapter Objective 5, AACSB: Reflective Thinking)

9-20. List three roles employees play in the organizational decision-making process.

Employees are often collaborators in the decision making process, or participate in the problem solving process including the evaluation of product choices. Depending on the decision, the choice may include some or all of the group members, and different group members play important roles in what can be a complicated process. These roles include the following: Initiator—The person who brings up the idea or identifies a need. Gatekeeper—The person who conducts the information search and controls the flow

of information available to the group. In organizational contexts, the gatekeeper identifies possible vendors and products for the rest of the group to consider. Influencer—The person who tries to sway the outcome of the decision. Some people may be more motivated than others to get involved, and participants also possess different amounts of power to get their point across. Buyer—The person who actually makes the purchase. The buyer may or may not actually use the product. User—The person who actually consumes the product or service.

(10 minutes, Chapter Objective 5, AACSB: Reflective Thinking)

9-21. What is the difference between an autonomic and syncretic decision?

When one family member chooses a product, this is an autonomic decision. In traditional households, for example, men often have sole responsibility to select a car, whereas decorating choices fall to women. Syncretic decisions, such as a vacation destination, involve both partners. These choices are common for vacations, homes, appliances, furniture, home electronics, and long-distance phone services. As the couple’s educational level increases, they are more likely to make decisions together.

(5 minutes, Chapter Objective 7, AACSB: Reflective Thinking)

9-22. What are some differences between “traditional” and “modern” couples in terms of how they allocate household responsibilities?

As women continue to work outside the home in great number, their influence on

household purchase decisions grows accordingly. The share of mothers employed

full- or part-time has quadrupled since the 1950s and today accounts for nearly three quarters of women with children at home. The number of women who are their families’

sole or primary breadwinner also has soared, to 40 percent today from 11 percent in 1960. As we’ve seen, women’s roles within the family decision-making unit are changing, but so are those of men. For one thing, single men remain a powerful and often ignored force in the marketplace. Right now, 3 out of 10 men are single, and more than 80 percent of them make the sole or key big-ticket decisions in their households. Another driver of this change is that as we’ve just seen, more women are working outside the home and at better-paying jobs. This means that a growing number of husbands today stay home with the kids: The Census Bureau reports that one-fifth of fathers with preschool-age children and working wives are the primary caretaker. As one marketing executive observed, “Kids are going to grow up with dads that give them baths and drive them to soccer and are cutting up oranges for team snacks.” Already, by some estimates men do more than half of the grocery shopping in the United States.

(10 minutes, Chapter Objective 7, AACSB: Reflective Thinking)

9-23. What is a kin-network system?

Despite the shift in decision-making responsibilities, women are still primarily responsible for the continuation of the family’s kin-network system, They maintain ties among family members, both immediate and extended. Women are more likely to coordinate visits among relatives, stay in touch with family members, send greeting cards, and arrange social engagements. This organizing role means that women often make important decisions about the family’s leisure activities, and they are more likely to decide with whom the family will socialize.

(5 minutes, Chapter Objective 7, AACSB: Reflective Thinking)

9-24. Describe a heuristic a couple might use when they make a decision, and provide an example of it.

Responses will vary by student, based on examples. The couple defines their areas of common preference on obvious, objective dimensions rather than subtler, hard-to-define cues. For example, they may easily agree on the number of bedrooms they need in the new home, but they have a harder time when they need to agree on how the home should look. The couple negotiates a system of task specialization in which each is responsible for certain duties or decision areas and does not intrude on the other’s “turf.” For many couples, sex roles often dictate just what these territories are. For example, the wife may do advance scouting for houses that meet their requirements, and the husband determines whether the couple can obtain a mortgage. The likelihood of one partner conceding to the wishes of the other depends on how passionately each person desires a specific outcome. One spouse yields to the influence of the other in many cases simply because his or her preference for a certain attribute is not particularly intense. In other situations, he is more willing to fight for what he wants (in other words, “choose your battles”). In cases where intense preferences for different attributes exist, rather than attempting to influence each other, spouses will “trade off ” a less-intense preference for a more strongly felt desire. For example, a husband who is somewhat indifferent about kitchen design may give in to his wife in exchange for permission to design his own “Man Cave.”

(10 minutes, Chapter Objective 7, AACSB: Reflective Thinking)

CONSUMER BEHAVIOR CHALLENGE

DISCUSS

9-25. Excessive food consumption may link to emotional issues such as feelings of inferiority or low self-esteem. In some situations people consume products (especially food) as a reaction to prior life experiences such as loss of a loved one or perhaps abuse as a child. A British man whom the U.K. news media once dubbed “the world’s fattest man” when he weighed in at 980 pounds is a case in point. He explained that as an adult his insatiable desire to constantly eat stemmed from an abusive father and sexual abuse by a relative: “I still had all these things going around in my head from my childhood. Food replaced the love I didn’t get from my parents.” (The good news: after a gastric bypass operation this man has lost almost two-thirds of his body weight). Obviously this is an extreme case, and it certainly doesn’t mean that everyone who struggles with his or her weight is a victim of abuse! Nonetheless, emotion often plays a role—a dieter may feel elated when he weighs in at three pounds less than last week; however, if he fails to make progress he may become discouraged and actually sabotage himself with a Krispy Kreme binge. Is it ethical for food companies to exploit these issues by linking their products to

enhanced moods?

Responses will vary based on the beliefs of students. Students should consider the cognitive, habitual, and effective aspects of consumer decision making. The feedback loop should be used to help with self-regulation. Implementation intentions should be discussed in terms of how they are exploited.

(20 minutes, chapter Objective 1, AACSB: Ethical understanding and reasoning)

9-26. The chapter discusses ways that organizations can use “nudges” to change consumer behavior. Critics refer to them as benevolent paternalism because they argue they force people to “eat their vegetables” by restricting the freedom to choose. For example, several cities including New York and Philadelphia have tried (unsuccessfully thus far) to ban the sales of extra large portions of sugary drinks. What’s your take on these efforts – should local, state or federal governments be in the business of nudging citizens to be healthier?

Responses will vary based on the beliefs of the students. Students should understand how much of the current work in behavioral economics demonstrates how a nudge—a deliberate change by an organization that intends to modify behavior—can result in dramatic effects. A simple “nudge” that changes how people act is to switch from asking consumers to “opt in” to a program to asking them to “opt out” of a program if they don’t want to participate.

(20 minutes, chapter Objective 1, AACSB: Ethical understanding and reasoning)

9-27. Why is it difficult to place a product in a consumer’s evoked set after it has already been rejected? What strategies might a marketer use in an attempt to accomplish this goal?

It is difficult to place a product into an evoked set after it has been rejected because consumers are “cognitive misers.” This means that people conserve their mental resources and expend only a minimum effort required to solve a problem. Once a product has been eliminated from consideration based on some evaluation process, consumers are not likely to expend additional cognitive resources to re-evaluate that product.

Promotional strategies can be used to get the consumer to reconsider the product. Price discounts, coupons, special offers, rebates, or free samples will increase the possibility that a product will re-enter the evoked set. Any other means to get the consumer to try the product will increase the possibility of consideration of the product, and successful trial will increase the chances of a product being included in the consumer’s evoked set.

(15 minutes, Chapter Objective 3, AACSB: Reflective Thinking)

9-28. Technology has the potential to make our lives easier as it reduces the amount of clutter we need to work through to access the information on the Internet that really interests us. However, perhaps intelligent agents that make recommendations based only on what we and others like us have chosen in the past limit us, in that they reduce the chance that we will stumble on something (e.g., a book on a topic we’ve never heard of or a music group that’s different from the style we usually listen to) through serendipity. Will the proliferation of “shopping bots” make our lives too predictable by only giving us more of the same? If so, is this a problem?

Responses will vary by student. Intelligent agents are sophisticated software programs

that use collaborative filtering technologies to learn from past user behavior to recommend new purchases. When you let Amazon.com suggest a new book, the site uses an intelligent agent to propose novels based on what you and others like you have bought in the past. The biggest problem Web surfers face these days is to narrow down their choices, not to beef them up. In cyberspace, simplification is key. If we Google a term, most of us are only likely to look at the first few results at the top of the list.

Indeed, that’s one reason why search engine optimization (SEO) is so important

today; this term refers to the procedures companies use to design the content of Web

sites and posts to maximize the likelihood that their content will show up when someone

searches for a relevant term. Our goal is to persuade people to access our content. Just like an expert fisherman chooses his spot and carefully selects the right lure to catch a fish, SEO experts create online content that will attract the attention of the search algorithms, or mathematical formulas, that companies like Google use to determine which entries will turn up in a search. The algorithm will hunt for certain keywords, and it also will consider who uses them.(20 minutes, chapter Objective 2, AACSB: Ethical understanding and reasoning)

9-29. It’s increasingly clear that many postings on blogs and product review Web sites

are fake or are posted there to manipulate consumers’ opinions. How big a problem

is this if consumers increasingly look to consumer-generated product reviews during the stage of information search? What steps, if any, can marketers take to nip this problem in the bud?

9-30. Commercial Alert, a consumer group, is highly critical of neuromarketing. The group's executive director wrote, “What would happen in this country if corporate marketers and political consultants could literally peer inside our brains and chart the neural activity that leads to our selections in the supermarket and voting booth? What if they then could trigger this neural activity by various means, so as to modify our behavior to serve their own ends?” What do you think? Is neuromarketing dangerous?