Chapter 8 Learning Objective 1 Consumer decision making is a central part of consumer behavior, but the way we evaluate and

choose products varies widely. We almost constantly need to make decisions about products. Some of these decisions are very important and entail great effort, whereas we make others on a virtually automatic basis. The decision making task is further complicated because of the sheer number of decisions we need to make in a marketplace environment characterized by consumer hyperchoice. Perspectives on decisions 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. This trend is accelerating as marketers begin to introduce smart products that enable silent commerce, where the products literally make their own purchase decisions.

Problem Recognition, Information Search, Evaluation of Alternatives, Product Choice, Post Purchase Evaluation

Learning Objective 2 A decision is actually composed of a series of stages that results in the selection of one product over competing options. A typical decision process involves several steps. The first is problem recognition, when we realize we must take some action. This recognition may occur because a current possession

malfunctions or perhaps because we have a desire for something new. Once the consumer recognizes a problem and sees it as sufficiently important to warrant some action, he begins the process of information search. This search may range from doing a simple scan of his memory to determine what hes done before to resolve the same problem to extensive fieldw ork during which he consults, such as brand names or price, or they may simply imitate others choices. In the evaluation of alternatives stage, the product alternatives a person considers constitute his 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.

Learning Objective 3 Decision making is not always rational. Research in the field of behavioral economics illustrates that decision making is not always strictly rational. Principles of mental accounting demonstrates that the way a problem is posed (called framing) and whether it is put in terms of gains or losses influences what we decide.

Learning Objective 4 Our access to online sources changes the way we decide what to buy. The World Wide Web has changed the way many of us search for information. Today, out problem is more likely to weed out excess detail than to search for more information. Comparative search sites and intelligent agents help to filter and guide the search process. We may rely on cybermediaries, such as Web portals, to sort through massive amounts of information as a way to simplify the decision making process. Learning Objective 5 We often fall back on well-learned rules-of-thumb to make decisions. Very often, we use heuristics, or mental rule 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 know brad names or a product 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 its the easiest thing to do.

Learning Objective 6 Consumers rely on different decision rules when they evaluate competing options . When the consumer eventually must make a product choice form among alternatives, he uses one of several decision rules. Noncompensatory rules eliminate alternatives that are deficient on any of the crit eria weve chosen. Compensatory rules, which we are more likely to apply in high involvement situations, allo w us to consider each alternatives good and bad points more carefully to arrive at the overall best choice. Glossary Consumer Hyperchoice: A condition where the large number of available options forces us to make repeated choices that drain psychological energy and diminish our ability to make smart

decisions. Rational Perspective: A view of the consumer as a careful, analytical decision maker who tries to maximize utility in purchase decisions. Purchase Momentum: initial impulses to buy in order to satisfy our needs increase the likelihood that we will buy even more Cognitive Processing style: A Predisposition to process information. Some of us tend to have a rational system of cognition that processes information analytically and sequentially using roles of logic, while others rely on an experiential system of cognition that processes information more holistically and in parallel. Behavioral Influence Perspective: the view that consumers decisions are learned responses to environmental cues Experiential Perspective: An approach stressing the Gestalt or totality of the product or service experience, focusing on consumers affective response in the marketplace Extended Problem Solving: An elaborate decision making process, often initiated by a motive that is fairly central to self-concept and accompanied by perceived risk; the consumer tries to collect as much information as possible, and carefully weighs product alternatives Social Game: A multi-player, competitive, goal-oriented activity with defined rules of engagement and online connectivity among a community of players Game platform: an online interface that allows users to engage in games and other social activities with members of a community Mode: in the context of social gaming, the way players experience the game world Milieu: in the context of social gaming the visual nature of the game such as science fiction, fantasy, horror, and retro Genre: in the context of social gaming, the method of play such as simulation, action, and roleplaying MMORPGs: online role-playing games that typically involve thousands of players

Game Based Marketing: a strategy that involves integrating brand communications in the context of an online group activity Limited Problem Solving: A problem-solving process in which consumers are not motivated to search for information or to rigorously evaluate each alternative; instead they use simple decision rules to arrive at a purchase decision Habitual Decision Making: choices made with little or no conscious effort Problem Recognition: the process that occurs whenever the consumer sees a significant difference between his or her current state of affairs and some desired or ideal state; this recognition initiates the decision-making process Information Search: the process by which the consumer survey his or her environment for appropriate data to make a reasonable decision Search Engines: software that helps consumers access information based upon their specific requests Maximizing: a decisions strategy that seeks to deliver the best possible result Satisficing: A decision strategy that aims to yield an adequate solution rather than the best solution in order to reduce the costs of the decision-making process Bounded Rationality: a concept in behavioral economics that states since we rarely have the resources (especially the time) to weigh every possible factor into a decision , we settle for a solution that is just good enough Sisyphus Effect: decision makers who are so thorough they dont even rely on their past experiences to guide their current choice. Instead they start almost from scratch to research options for each unique decision situation Variety Seeking: the desire to choose new alternatives over more familiar ones Variety Amnesia: a condition where people consume products to the point where they no longer enjoy them Mental Accounting: principle that states that decisions are influenced by the way a problem is posed

Framing: a concept in behavioral economics that the way a problem is posted to consumers (especially in terms of gains or losses) influences the decision they make Behavioral Economics: the study of the behavioral determinates of economic decisions Anchoring: a concept in behavioral economics that refers to a number that people use as a standard for future judgments Hyperopia: the medical term for people who have farsighted vision; describes people who are so obsessed with preparing for the future that they cant enjoy the present Prospect Theory: a descriptive model of how people make choices Blissful Ignorance Effect: states that people who have details about a product before they buy it do not expect to be as happy with it as do those who got only ambiguous information Perceived Risk: belief that a product has potentially negative consequences Evoked Set: those products already in memory plus those prominent in the retail environment that are actively considered during a consumers choice process Consideration Set: the products a consumer actually deliberates about choosing Knowledge Structure: organized systems of concepts relating to brands, stores, and other concepts Category Exemplars: brands that are particularly relevant examples of a broader classification Feature Creep: the tendency of manufacturers to add layers of complexity to products that make them harder to understand and use Evaluative Criteria: the dimensions used by consumers to compare competing product alternatives Determinant Attributes: the attributes actually used to differentiate among choices Neuromarketing: a new technique that uses a brain scanning device called functional magnetic resonance imaging (Fmri), that tracks blood flow as people perform mental tasks. Scientists know that specific regions of the brain light up in these scans to show increased blood flow when a person recognizes a face, hears a song, makes a decision, senses deception, and so on.

Now they are trying to harness this technology to measure consumers reactions to movie trailers, choices about automobiles, the appeal of a pretty face, and loyalty to specific brands Cybermediary: intermediary that helps to filter and organize online market information so that consumers can identify and evaluate alternatives more efficiently Long Tail: States that we need no longer rely solely on big hits (such as block buster movies or bestselling books) to find profits. Companies can also make money if they sell small amounts of items that only a few people want-if they sell enough different items Intelligent Agents: software programs that learn from past users behavior in order to recommend new purchases Electronic Recommendation Agent: a software tool that tries to understand a human decision makers multiattribute preferences for a product category by asking the user to communicate his or her preferences. Based on that data, the software then recommends a list of alternatives sorted by the degree that they fit with the persons preferences Brand Advocates: consumers who supply products reviews online Reputation Economy: a reward system based on recognition of ones expertise by others who read online products reviews Heuristics: the mental rules of thumb that lead to a speedy decision Product Signal: communicates an underlying quality of a product through the use of aspects that are only visible in the ad Market Beliefs: a consumers specific beliefs or decision rules pertaining to marketplace phenomena Country of Origin: original country from which a product is produced. Can be an important piece of information in the decision-making process Ethnocentrism: the belief in the superiority of ones own country practices and products Zipfs Law: pattern that describes the tendency for the most robust effect to be far more powerful than others in its c lass; applies to consumers behavior in terms of buyers overwhelming preferences for the market leader in a product category

Inertia: the process whereby purchase decisions are made out of habit because the consumer lacks the motivation to consider alternatives Brand Loyalty: repeat purchasing behavior that reflects a conscious decision to continue buying the same brand Noncompensatory Decision Rules: decision shortcuts a consumer makes when a product with a low standing on one attribute cannot make up for this position by being better on another attribute Compensatory Decision Rules: a set of rules that allows information about attributes of competing products to be averaged in some way; poor standing on one attribute can potentially be offset by good standing on another