CH-8 Judgment and Decision Making Based on High Effort – Consumer Behavior : Book Guide

Chapter 8 Judgment and Decision Making Based on High Effort CHAPTER SUMMARY Judgments involve forming evaluations or estimates of the likelihood of events are not always objective, whereas decisions entail a choice between options or courses of action. Two types of judgments are likelihood and goodness or badness; both of which can be made by recalling past judgments using imagery or an anchoring and adjustment process. Once consumers recognize a problem, they may address it using cognitive decision making models (deciding in a rational, systematic manner) or affective decision models (deciding on the basis of feelings or emotions). Consumers face a number of other decisions in high-effort situations: which brands to consider (developing the consideration set); what’s important to the choice (affected by goals, timing and decision framing); what offerings to choose; whether to make a decision now; and what to do when alternative cannot be compared. In thought-based decisions about offerings, consumers may use compensatory or noncompensatory models; process by brand or by attribute; and consider gains versus losses. Feeling-based decisions about offerings may rely on appraisals and feelings, affective forecasts and choices, and imagery. Finally, three types of contextual factors can influence the decision process: (1) consumer characteristics; (2) decision characteristics; and (3) the presence of a group. CHAPTER LEARNING OBJECTIVES After studying this chapter, students will be able to 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. CHAPTER OUTLINE I. High-Effort Judgment Processes A. Judgments of Likelihood and Goodness/Badness 1. Estimations of likelihood involve determinations of how probable it is that something will occur. Judgments of goodness/badness are the consumer’s evaluation of the desirability of product or service features. 2. Mental and Emotional Accounting a) Mental accounting is categorizing spending and savings decisions into “accounts” for certain goals or transactions. b) Emotional accounting is the intensity of the positive or negative feelings associated with each account is an important influence on consumer behavior. 3. Biases in Judgment Processes a) Because consumers possess a confirmation bias to acquire and process confirming information, they tend to be overconfident in their judgments. b) Consumers often exhibit a self-positivity bias, believing that bad things are more likely to happen to others, rather than themselves. c) Consumers seem to weigh negative information more heavily than positive information, creating a negativity bias. d) Mood, which can bias judgment, serves as your initial anchor for judgment. e) Prior brand evaluations can bias judgment. f) Prior experiences can bias judgment. g) The ease or difficulty of calculating price or discount differences can bias judgment. 4. Marketing Implications a) Marketers can help guide consumers’ judgments by choosing an appropriate anchor from which to adjust their attitudes. b) In brand extensions, the existing brand name and its positive (or negative) associations act as anchors and influence for judgments of the new product c) Country of origin can also be used as a judgment anchor. d) Marketers can positively influence consumers’ judgments by priming, or creating a positive mood in the consumer. e) Marketers can also affect consumers’ perceptions of the likelihood of events. II. High-Effort Decisions and High Effort Decision-Making Processes A. Deciding Which Brands to Consider 1. Consumers’ decisions sets include: a) The consideration set, or the set of products/services they want to choose from. b) The inert set, or the set that is treated with indifference. c) The inept set, or the set of unacceptable alternatives. 2. According to the attraction effect, changing the alternatives in the consideration set can have a major impact on consumers’ decisions. B. Deciding Which Criteria Are Important to the Choice 1. Goals a) Goals can affect the criteria that will drive a consumer’s choice b) Consumers’ goals may change during the decision-making process. 2. Time a) The timing of a decision can affect which criteria drive a consumer’s choice. b) Construal level theory posits that whether abstract or concrete construals are used depends on whether the decision is about something the consumer will buy/use now or in the future. 3. Framing a) The way the task is represented, decision framing can affect how important a criterion is to consumers’ choices. b) Consumers are more willing to take risks when a choice is framed as avoiding a loss rather than acquiring a gain. c) Decisions can also be framed by how the problem is structured in the external environment (e.g., choosing between beef that is 25% or 75% lean). d) Whether a decision is framed positively or negatively influences evaluation differently. e) Marketers can help prime consumers to focus on specific criteria in their decision making. 4. Marketing Implications a) Marketers can position (frame) an offering as being consistent with consumers’ goal-related or usage categories. III. Deciding What Brand to Choose: Thought-Based Decisions A. Cognitive decision making models focus on how consumers use information about attributes to reach a decision, while affective decision making models focus on consumers’ choices based on emotions and feelings. 1. Compensatory Versus Noncompensatory Models a) With compensatory models, consumers choose the brand that has the greatest number of positive features relative to negative features. A negative evaluation of one attribute can be compensated for by positive features of other attributes. b) With a noncompensatory model, negative information leads to immediate rejection of the brand or service from the consideration set. c) Noncompensatory models require less cognitive effort than compensatory models because consumers set cutoff levels for each attribute, and reject any brand below the cutoff level. d) Marketing Implications. (1). As different models can lead to different choices, marketers may want to change the process by which consumers make decisions. B. Decisions Based on Brands 1. Consumers may evaluate one brand at a time. 2. Mult attribute models are brand-based compensatory models, including the Theory of Reasoned Action (TORA) model. a) Mult attribute models are cognitively and emotionally taxing as consumers have to make tradeoffs among attributes. 3. Consumers simplify decisions by using noncompensatory, brand-based models. a) Using a conjunctive model, consumers set minimum cutoff levels for each attribute. (1). Unacceptable alternatives are quickly eliminated in a conjunctive model b) The disjunctive model is similar to the conjunctive model with two important exceptions. (1). The consumer sets up acceptable levels for the cutoffs, levels that are more desirable (2). The consumer bases the evaluation on several of the most important attribute rather than all attributes. 4. Marketing Implications a) Brand-based models help marketers understand what attributes consumers consider in decision making, and how the consumers evaluate their brands. (1). If a consumer does not rate a company’s brand high on a given attribute, the marketer can focus communication efforts on improving the consumers’ opinions. b) Decision models can also help in the planning of comparative advertising. C. Decisions Based on Product Attributes 1. Sometimes consumers process one attribute. a) Although most consumers prefer attribute processing because it is cognitively easier, they cannot always find information in the correct format to facilitate attribute processing. 2. In an additive difference model, brands are compared by attribute, two brands at a time. a) Consumers compare each important attribute, evaluate the differences, and combine them in an overall preference. 3. In a lexicographic model, consumers order attributes in terms of importance and compare the alternatives one attribute at a time starting with the most important attribute. a) If one alternative dominates on the most important attribute, it is selected. b) In the case of a tie, the consumer then considers the next most important attribute until there is a clear preference. 4. In the elimination-by-aspects model, consumers again rank the attributes in order of importance, but also consider acceptable cutoff levels for each attribute. a) This model is not as rigid as the lexicographical model as more attributes are likely to be considered. 5. Marketing Implications a) An additive difference model allows marketers to present which attributes exhibit the largest differences between brands. They can use this knowledge to improve and position their brands. b) A lexicographical model illustrates the ranking of attribute importance. If the brand is weak on the most important attribute, marketers will need to improve this feature and effectively communicate that improvement. c) Identifying consumers’ cutoff levels is also useful to marketers. D. Decisions Based on Gains and Losses 1. Consumers’ decisions may differ depending on whether their goal is to seek gains or avoid losses. 2. Prospect theory posits that losses loom larger than gains for consumers, even when they are of the same magnitude. a) For example, in the endowment effect, sellers typically ask for a higher price (as they are losing the item) than buyers are willing to pay (as they will be gaining the item). b) Consumers have a stronger reaction to price increases than price decreases. c) Consumers’ promotion- and prevention-focused goals will impact this decision process. 3. Marketing Implications a) Marketers must make an effort to reduce risks and potential losses for consumers by offering guarantees or easy payment plans. b) Marketers need to carefully consider the amount of a price increase because the greater the increase, the greater the negative reaction from consumers. c) Marketers should try to frame price increases as a gain to consumers, such as an increase in product quality. IV. Deciding What Brand to Choose: High-Effort Feeling-Based Decisions A. When engaged in affective decision making, consumers make decisions based on what feels right rather than a detailed, systematic evaluation of attributes. 1. Consumers who make affectively based decisions tend to be more satisfied than those who make decisions based on product attributes. a) Positive feelings for brands may be based on past experiences and associated feelings. 2. Appraisals and Feelings a) Appraisal theory examines how our emotions are determined by how we think about a situation. b) The theory also explains how and why some emotions affect future judgment and decisions. 3. Affective Forecasts and Choices a) Affective forecasting is consumers’ predictions of how they will feel in the future. b) It involves how consumers think they will feel as a result of a decision, how intense that feeling is, and how long the consumer will have the feeling. c) Consumers’ affective forecasts are not always accurate. 4. Imagery a) Imagery occurs when consumers imagine themselves using a product/service. b) Imagery, either positive or negative, can affect consumers’ decisions. c) Adding information will facilitate consumers’ imagery processing, whereas in cognitive processing the consumer may experience information overload. d) Imagery encourages brand-based processing. 5. Marketing Implications a) A variety of marketing techniques can be employed to enhance both consumers’ emotional experience and imagery surrounding an offering. V. Additional High-Effort Decisions A. Decision Delay 1. Consumers may perceive that a decision is too risky or unpleasant right now and delay the decision. 2. Another reason for decision delay is the uncertainty of where to find product information. 3. Marketing Implications a) Marketers may want the consumer to make an immediate decision, although sometimes encouraging decision delay may increase the likelihood of a brand being selected. B. Decision Making When Alternatives Cannot Be Compared 1. In making noncomparable decisions, consumers tend to use one of two strategies. a) Alternative-based strategy (1). Consumers develop an overall evaluation of each option and make the decision based on this evaluation. b) Attribute-based strategy (1). Consumers make comparisons easier by forming abstract representations of comparable attributes. 2. Marketing Implications a) Marketers should look at the product’s competition in broad terms because of the ability of consumers to compare noncomparable alternatives. b) Price may be an important attribute when consumers are deciding between noncomparative alternatives. VI. What Affects High-Effort Decisions? A. Consumer Characteristics 1. Expertise a) Expert consumers have a larger consumption vocabulary and thus can use more attributes and information in making a decision. b) Expert consumers tend to use brand-based decision strategies. 2. Mood a) Consumers in a good mood are more willing to process information and take time in decision making. b) Consumers in a good mood make more extreme (positive or negative) evaluations. c) One study says that consumers in a high-arousal mood tend to process information less thoroughly. d) Consumers in a bad mood are more likely to recall a marketing message. e) Consumers in a good mood judge objects more positively. f) Consumers in a good mood are more likely to try new products/services. 3. Time pressure a) As time pressure increases, consumers initially try to process relevant information faster. b) Consumers under time pressure then will base their decisions of fewer attributes and place more weight on negative information, thus eliminating bad alternatives quickly using noncompensatory decision strategies. c) Time pressure also affects consumers’ decisions to delay their choices. 4. Extremeness aversion a) Options perceived as extreme on an attribute will seem less attractive than those perceived as intermediate. b) According to the compromise effect, a brand will gain share when it is seen as an intermediate choice rather than an extreme choice. 5. Metacognitive experiences a) Metacognitive experiences include factors such as how easy it is to recall information in memory and form thoughts, and how easy it is to process new information. b) Metacognitive experiences influence retrieval ease, inferences and biases. B. Characteristics of the Decision 1. Information availability a) The amount, quality and format of available information can affect the decision strategies consumers use. b) Having more information will lead to better choices up to the point of information overload. c) If information is useful and relevant, decision making is less taxing and better decisions are made. d) If information is ambiguous, consumers will likely stay with their current brand rather than risk trying a new brand. 2. Information format a) If information is organized by brand, consumers will more likely use brand-based decision strategies. b) If information is organized by attribute or in a matrix, consumers will likely use attribute-based strategies. c) Consumers presented with a narrative format of information tend to process information more holistically and thus negative information had less impact. 3. Trivial attributes a) Consumers sometimes finalize decisions by examining trivial attributes. C. Group Context 1. Consumers’ decisions can be affected by the presence of a group. Group members attempt to balance both individual-alone goals and individual-group goals when making a decision. 2. In a group, consumers face three types of individual-group goals. a) Self-presentation goals refer to the image that consumers hope to convey by their decisions. b) Minimizing regret refers to risk adverse consumers who tend to make decisions similar to the rest of the group. c) Information gathering can result when consumers are in a group and share information. D. Marketing Implications 1. Understanding what affects consumer decision making can influence pricing and marketing communication strategies. ILLUSTRATION OF NONCOMPENSATORY MODELS The conjunctive model is applied one brand at a time. To illustrate, suppose Elena has set bare minimum levels for the belief strengths as shown in the conjunctive section of the exhibit shown here. Keep in mind that normally consumers would not formally assign these specific numbers as their cutoffs; they would have a general idea of the minimum levels. The model would simply require comparing each bi rating to its cutoff. Looking at the bi ratings, it is clear that State A passes each one; State B is rejected because it fails to meet the minimum cutoff level on “far from home,” and State C is rejected because it fails to meet the minimum level of acceptability on “prestigious.” In some cases, there can be more than one acceptable option with a conjunctive model because choices are based on bare minimums with the intent of getting rid of alternatives. If this happens, another rule is needed to make a final choice. Using the lexicographic model, Elena’s cutoffs for belief strengths in the disjunctive section of Exhibit 10A are higher than in the conjunctive section. Again, if she proceeds one attribute at a time, State A is above all cutoffs. State B and State C fail on some outcomes and would both be rejected. Using the elimination-by-aspects model, Elena would first compare the schools on quality of faculty and find State A and State C tied. She would then move to “prestigious” and select State A because it is higher on this factor. Returning to our example and using the same cutoffs as the disjunctive model, Elena would not eliminate any of the universities on the “superior faculty” attribute, but she would reject State B and State C on the “prestigious” attribute. QUESTIONS FOR REVIEW AND DISCUSSION Possible answers are as follows. 1. How does consumer judgment differ from consumer decision making? Answer: Judgment is the process of estimating the likelihood of an event or making evaluations. Decision making is the act of making a selection between options. (A good class discussion is which is more important in consumer behavior—judgment or decision making?) 2. What is the anchoring and adjustment process, and how does it affect consumer judgment? Answer: The anchoring and adjustment process is when a consumer starts with an initial evaluation and adjusts it accordingly with additional information. The nature of the initial judgment is extremely important, because it greatly affects the outcome of consumer judgments. Since consumers tend to believe information that is consistent with their beliefs, it is often difficult to significantly change consumers’ evaluations from this initial anchoring position. 3. How do consumers use compensatory and noncompensatory decision-making models? Answer: In theory, consumers combine items of information about attributes to reach rational, systematic decisions. Consumers in different purchase situations use different decision-making models. A combination of compensatory models (i.e., cost-benefit analysis) and non-compensatory models (i.e., negative information leads to rejection of options) can be employed in the decision-making process. 4. Explain how consumers use their goals, decision timing, and framing to decide which criteria are important to a particular choice. Answer: Consumers will examine choice criteria that are consistent with their consumption goals. The timing of a decision, such as whether it is immediate or in the future, influences the level of construals consumers use in making the decision. The framing of the decision can influence how important specific choice criteria will be in the decision. 5. Why do marketers need to know that attribute processing is easier for consumers than brand processing? Answer: When marketers realize situations in which it is easier for the consumer to compare alternatives on a small number of attributes (sometimes one attribute), they are able to adjust their marketing mix variables accordingly. Marketers can highlight the quality and uniqueness of their product with respect to this particular attribute that is important to the consumer. Marketers often attempt to convey a positive image for the overall brand, when in reality the consumer may be making comparisons on a particular attribute. 6. How do appraisals and feeling as well as affective forecasting influence consumer decision making? Answer: Consumers’ decisions are often based on how they appraise a particular situation. Feelings and emotions can override the careful cognitive examination of a product’s attributes. In addition to current feelings influencing decisions, consumers also engage in affective forecasting, or predicting what they will feel in the future. Affective forecasting allows the consumer to imagine how a purchase will make him/her feel in the future. 7. What three contextual elements affect consumer decision making? Answer: Consumer characteristics such as their level of expertise, their mood, and the amount of time pressure can influence the decision-making strategies they use. Additionally, most consumers exhibit extremeness aversion. Other consumer characteristics that can influence consumers’ decisions are metacognitive experiences. Characteristics of the decision itself, including the availability, quality and format of information, and the presence or absence of trivial attributes, can influence consumers’ decision strategies. Finally, the presence of a group can influence consumers’ decisions as they try to balance their goals with those of the group. CONSUMER BEHAVIOR CASE Harley-Davidson Wheels into India Can Milwaukee-based Harley-Davidson roar into India—the world’s second-largest market for motorcycles, after China—and attract buyers despite strong competition from local and global bike brands? With more than a century of tradition behind its iconic American brand, Harley isn’t starting from scratch in India. It enjoys high brand recognition worldwide and began planning for a presence in India in 2005. Two years later, a U.S.-India trade deal paved the way for foreign-made, heavy-weight bikes like Harley’s to be imported and sold throughout the country. Once Harley had the green light to go into high gear, it began recruiting dealers in five metropolitan areas. Marketers for Harley see India’s economy growing rapidly. Its expanding middle class has both considerable buying power and an appetite for world-class, brand-name products. Most of these consumers have seen Harley bikes in Hollywood movies, and some have met Harley owners or tested Harley bikes at cycling events. Harley’s research shows that affluent motorcycle enthusiasts tend to own more than one bike (one for weekday commuting and another for weekend trips, for instance). “These are people who have worked hard, earn well, and can now allow themselves the chance to explore their passions,” explains the managing director. Still, Harley must compete against long-established bike brands such as Royal Enfield, which has its own loyal customer base. Consumers in India can compare Royal Enfield’s four-stroke engines—responsible for the “thumper” sound associated with the brand—with Harley’s more powerful V-twin engines, which produce that brand’s signature thundering sound. Looking at price, they will find Royal Enfield’s bikes carry a lower price tag than Harley’s, in part because of import duties. Consumers concerned about the availability of repair services will also compare Harley’s handful of dealerships with Royal Enfield’s countrywide dealership network. Harley’s unique image of independence and individuality is a clear point of differentiation. The company also has other competitive advantages. One is that it offers a full range of motorcycles and accessories, with customization options that bike buyers particularly value. The company is developing special customization kits so buyers can mix and match Harley engines and parts to create one-of-a-kind motorcycles in India as they do in other markets. A second competitive advantage is that only Harley buyers can join the Harley Owners Group (HOG), a global group whose one million-plus members are invited to events such as bike training “boot camp,” weekend rides, and film festivals exclusively for Harley owners. HOG members also get to attend the company’s owners-only rock concerts featuring top Indian bands. “We want to give bike lovers the full ownership experience in India,” Harley’s managing director says about local HOG activities. A third advantage is that Harley dealerships permit buyers to test-drive every bike in the product line, which not every competitor allows. Test-drives help buyers try out the various features, experience first-hand the difference between individual models, and form an impression of how it would feel to ride a Harley bike. Harley is starting out strong in India. Before the first bike was delivered, the company had hundreds of pre-orders. As in most of the world, the majority of buyers are men. Unlike most Harley markets, however, here the fastest growth in sales is to men in their 30s and 40s. Women are also being targeted, according to the director of marketing in India: “While we strongly believe Harley-Davidson is more of a state of mind and it transcends gender and age, we see a tremendous potential with Indian women riders.” In fact, Harley is already the most popular brand among U.S. women bike buyers, a trend that could spread to India in the coming years. Case Questions 1. How is Harley-Davidson using marketing to influence emotional aspects of the motorcycle buying process? Answer: Harley creates positive affect by highlighting the brand image of independence and individuality, offering its customers membership into a global community of Harley riders, and “thanking” their customers through special members-only events. Additionally, by allowing customers to test-drive their products, Harley hopes they will develop a good feeling and emotional connection with the bike even before buying it. 2. What role are consumer characteristics likely to play in a consumer’s decision to buy a Harley-Davidson in India? Answer: Consumer characteristics are likely to play a large role in their buying decisions depending on each consumer’s situation. For example, an avid motorcyclist will consider many product attributes before buying a Harley, on the other hand time may be a more important factor for someone whose motorcycle broke down and is searching for a new, more reliable replacement. 3. In terms of the anchoring and adjustment process, what challenges and opportunities does Harley-Davidson face in marketing to Indian consumers? Answer: Opportunities – HD has a positive brand image internationally (anchor), which they can build upon through offerings such as the special customization kit for India (adjustment) Challenges – HD is more expensive and less familiar to Indians than the long-established bike brands in the country (anchor); however, HD have the opportunity to use the anchor of high price to emphasize their bikes’ high quality and the value of becoming a HOG member (adjustment) 4. Using the consumer behavior concepts in this chapter, explain the marketing thinking behind allowing buyers to test-drive any of the Harley-Davidson bikes. Do you agree with this marketing decision? Why or why not? Answer: Allowing customers to test-drive any Harley positively influences both cognitive and affective decision-making processes. Cognitively, it allows consumers to compare and contract different functional features between different Harleys and their competitors. Affectively, it creates a sense of trust between the brand and consumer and allows customers to “feel” like a Harley rider before they buy 5. How might consumers use thought-based decision models when considering a motorcycle purchase in India? What are the implications for Harley-Davidson? Answer: Consumers will likely compare attributes of various brands, such as price, reliability, customizability, etc. when deciding which brand to choose. Thus Harley must emphasize its positive attributes and ensure these outweigh any negative attributes (such as high price). Furthermore, by allowing customers to test-drive any or all of their bikes they will have more Harleys to compare with one another, hopefully turning the decision into a choice between different Harley bikes rather than the competitor’s. SUGGESTED EXERCISES AND TEACHER GUIDELINES 1. This chapter discussed several types of estimations of likelihood that consumers can make (such as estimating quality or likelihood of satisfaction, goodness/badness). What other types of judgments do consumers make? List as many as possible, and indicate what these judgments have in common. Answer: Students may mention social-related judgments such as the likelihood of acceptance by others, how the product may convey an image, and perceived risk of purchasing the product. Consumers make several types of judgments, including: 1. Price Sensitivity - Assessing if a product is worth its cost. 2. Brand Trustworthiness - Evaluating a brand's reliability. 3. Product Necessity - Determining if a product is essential. 4. Social Value - Judging how a product reflects on their social status. 5. Convenience - Estimating the ease of use or access. 6. Aesthetic Appeal - Evaluating the visual or design attractiveness. 7. Risk Perception - Assessing potential risks associated with a product. Commonality: All these judgments involve evaluating how well a product or service meets the consumer's needs, desires, or expectations, often incorporating subjective and emotional factors. 2. Select a product or service category for which you expect the consumers’ motivation, ability, and opportunity to process information to be high. Ask five consumers to describe in detail how they would go about making a decision for this product or service category. First ask them which brands they would consider (consideration set), and then ask them to describe the specific steps they would go through in making a decision. Which brand would they choose? After collecting this information, answer the following questions: (a) How do the descriptions provided by the consumers compare with the decision models discussed in this chapter? (b) How do these processes vary for different consumers? (c) Why did one brand tend to be chosen over another? (d) If these processes were representative of many consumers, how might this information be used to develop a marketing strategy? Answer: This exercise is similar in nature and scope to several of the exercises from Chapter 3. The key learning point here is to relate this chapter’s material to that of the earlier concepts from the beginning of class. Product Category: Smartphones Consumer Insights: 1. Consideration Set: • Consumers: Apple, Samsung, Google, OnePlus, Xiaomi 2. Decision-Making Steps: • Research reviews and specs • Compare prices and features • Test in-store • Evaluate brand reputation and deals (a) Comparison with Decision Models: • Aligns with Multi-Attribute Model and Elimination-by-Aspects. (b) Variation Among Consumers: • Differences in priority (e.g., brand vs. features) and information sources. (c) Brand Preference: • Chosen brands often have better performance, reputation, or value. (d) Marketing Strategy: • Emphasize key features, leverage positive reviews, and enhance brand reputation. 3. Pick a product or service category that is likely to generate high-elaboration decision making. Identify the most salient attributes for the decision, and collect information about these attributes. Ask ten consumers to rate each attribute in terms of the bi and Ib ratings from the compensatory model (see the box on page 234) for three major brands in this category. Based on this information, answer the following: (a) What are the strengths and weaknesses of each brand? (b) How would each model described in this chapter provide insights into consumers’ decision processes in this situation? (c) How would the information you have collected aid in designing marketing strategy? Answer: The following table can be used to illustrate the concepts of the compensatory and non-compensatory models for choosing a vacation: The letters in the answers correspond to the six different destinations (B = Bali, H = Hawaii, SD = San Diego, E = Europe, A = Alaska, I = Iceland) SUGGESTED INTERNET EXERCISES WITH SAMPLE ANSWERS AAA’S 55 ALIVE PROGRAM According to humor columnist Dave Barry, the typical American is convinced that he/she is an above-average driver. Joking aside, this common conviction explains the presence of so much danger on the road. Self-positivity bias concerning driving ability and behavior can result in severe consequences. How many incidents occur because a bad driver is in denial about his/her shortcomings? Of particular concern is the potential problem of the growing number of older drivers. Examine the product offerings available at the website for the American Automobile Association Foundation for Traffic Safety, www.aaafts.org. Describe the products and programs intended to help reduce older drivers’ self-positivity bias concerning their driving skills. Identify a potential barrier to their effectiveness. Hint: check out the links to quizzes and products. Instructor Notes AAAFTS promotes two major products targeted to older drivers. The 55 Alive driver education program for older drivers is available in many communities to both members and non-members of AAA. The AAAFTS website provides a quick, easy diagnostic quiz concerning driving habits and skills. The site scores the quiz automatically and offers advice for improvement, including the 55 Alive program. The Older and Wiser Driver, an inexpensive video which describes new strategies for drivers whose skills have changed with aging, also is available through the AAAFTS site. Both product offerings are designed to reduce older drivers’ self-positivity bias and to modify potentially dangerous driving habits, by reframing drivers’ thoughts and emotions concerning driving. The major barrier to the effectiveness of these product offerings is that they “preach to the choir.” Drivers with the highest degree of self-positivity bias are the least likely to take the online quiz, give honest answers, enroll in the 55 Alive program, or buy the video. Additional Uses This exercise also relates to concepts in the following chapters: • Chapter 4, Memory and Knowledge (schemas and semantic networks for driver education products or programs for older consumers) and (AAA brand name as a salient and prototypical retrieval cue) • Chapter 13, Household and Social Class Influences (impact of gender on driving behavior and willingness to consume driver education products, influence of adult children on elderly parents concerning driving skills) Discussion Idea What are the benefits of driving? Do these benefits change throughout a consumer’s lifetime? Possible answers include: • Ability to earn a living (driving to and from work) • Ability to enjoy life (vacation and leisure travel) • Convenience (travel when one wants to do so) • Independence (no need to rely on others for transportation) • The ability to earn a living may be more important for younger and middle-aged drivers than for older drivers (who are more likely to be retired) • The ability to enjoy life, convenience, and especially independence may be even more important for older drivers than for other drivers THE DIAMOND INFORMATION CENTER There are few high-effort decisions that incorporate both thinking and feeling as completely as the purchase of a diamond engagement ring. Typically these buying decisions are made by either a nervous young man or by a lovestruck young couple. The purchase comprises a substantial financial commitment at a time when emotions run high. Sponsored by De Beers Diamonds, the Diamond Information Center (www.adiamondisforever.com) is designed to help with this important purchase. What marketing techniques does the Diamond Information Center use to influence consumers’ thought-based decisions and feeling-based decisions concerning the purchase of an engagement ring? How does the site encourage more consumption of diamond products? Instructor Notes Certainly a consumer contemplating the purchase of a diamond engagement ring is motivated to process information. His mood is positive, and the incentive to make the best choice is very high. The Diamond Information Center provides details about the characteristics of high-quality diamonds, summarized by the “4 Cs” mnemonic (color, clarity, cut, and carat weight). Inexperienced buyers will find this information particularly helpful; they can even print it as a ready reference to use when shopping. The site reiterates the heuristic (probably invented and promoted by the diamond industry) that a diamond engagement ring should cost approximately two months’ salary, which may frame the anchor point for the consumer’s product judgments. Thus the Diamond Information Center influences the consumer’s ability to process by helping him to develop the appropriate consumption vocabulary. The online availability of information allows the consumer the opportunity to process in private before engaging in a retail search. The Diamond Information Center also describes the tradition underlying the diamond engagement ring in hopes of relegating non-diamond jewelry to the consumer’s inept set. One page mentions selecting the jewelry that the recipient “really wants,” thereby encouraging the buyer to incorporate high cutoffs for product quality and price within either a disjunctive decision model or a lexicographic decision model. Because the benefits of diamond jewelry are mainly hedonic and symbolic, the visually stunning Diamond Information Center emphasizes emotionally loaded words throughout its text, and provides rich imagery of diamond jewelry being worn. Other pages within the website suggest appropriate occasions or reasons to give diamond jewelry. The obvious purpose of this information is to influence the visitor to consume more diamond products. In addition, women are encouraged to buy their own diamond rings for their right hands. Additional Uses This exercise also relates to concepts in the following: • Chapter 3, From Exposure to Comprehension (personal relevance of the Diamond Information Center to people in love) • Chapter 4, Memory and Knowledge (schemas and scripts concerning diamond purchases) • Chapter 5, Attitudes Based on High Effort (adding new beliefs about the appropriate price for a diamond engagement ring or occasions for giving diamond jewelry) • Chapter 13, Household and Social Class Influences (prevalence of diamond engagement rings across social classes) • Chapter 16, Symbolic Consumer Behavior (transfer of symbolic meaning, marital transitions) Discussion Idea How does the Diamond Information Center use priming and framing to influence the decision? ADDITIONAL DISCUSSION QUESTIONS WITH SAMPLE ANSWERS These discussion questions can be used as in-class activities or as thought questions that the students consider while reading the chapter or to test their understanding of the material after the reading and lecture are complete. 1. In what context are products that are not in a consumer’s consideration set likely to be chosen? Give examples. Answer: A product that is not in a consumer’s consideration set will be selected only if the consumer is unexpectedly exposed to it. For example, a consumer might consider an unfamiliar brand of salsa if another shopper happens to say, “I just love this brand” or if a friend serves it at a party. 2. Explain how consumers use anchoring and the adjustment process in decision making. Answer: Anchoring is the standard against which product prices are compared to evaluate their reasonableness. Imagine that a travel agency quoted a consumer a price of $498 for an airline ticket for a route he just recently traveled for $328. He most likely would say the new fare was high because he would be comparing it to the $328 anchor. However, a businessperson, whose company normally purchases her ticket at full fare, $950, would think that $498 was a great bargain because her anchor is much higher. The consumer’s anchor price can be based on information in the external environment, an affective response or information in memory (in this case, what the consumer paid for the initial trip), or consumer values or norms. Consumers update or adjust the anchor as they receive new information. For example, the pleasure traveler might talk to a trusted friend who says there have been airfare increases across the board and that he has not been able to get a $328 ticket for months. The cheapest fare he has found is $650. The consumer may increase his anchor price based on this new information from his friend. ADDITIONAL QUESTIONS 1. Judgment and choice are not the same thing. Create a brief definition of each, which characterizes the differences between the two. Develop three examples of marketing-related judgments and decisions that consumers might make. Answer: • Judgment: Evaluating options. • Choice: Selecting among options. Examples: • Judging smartphone features. • Choosing a smartphone to buy. • Assessing a brand’s trustworthiness. 2. Estimation of likelihood is a term we have been using. Work together to create a concise definition of this term. Develop three new examples of these kinds of judgments. Explain why these estimations are important to marketers. Answer: Definition: Predicting the probability of an outcome. Examples: • Product success likelihood. • Delivery timeliness. • Matching consumer expectations. Importance: Helps forecast demand and design promotions. 3. Explain how consumers make judgments of goodness/badness. Develop an example to illustrate these processes. Explain the marketing implications of these processes. Answer: Definition: Evaluating favorability of a product. Example: Rating a restaurant’s quality. Marketing Implications: Emphasize positives and manage negatives. 4. Briefly explain how compensatory and noncompensatory models differ. Then select a high-effort situation and describe how someone would make the decision differently under each model. Explain the marketing implications of each of these models. Answer: • Compensatory: Weaknesses can be offset (e.g., car with high overall value). • Noncompensatory: Must meet specific criteria (e.g., minimum safety rating). High-Effort Decision: • Compensatory: Overall value (e.g., car features). • Noncompensatory: Must meet specific criteria (e.g., safety). Marketing Implications: • Compensatory: Highlight comprehensive value. • Noncompensatory: Focus on meeting critical criteria. 5. Discuss the distinction between brand processing and attribute processing. Explain why these differences are important to marketers. Answer: • Brand Processing: Focus on brand reputation. • Attribute Processing: Focus on specific features. Importance: Tailor strategies to brand vs. attribute focus. 6. As a group, select a high-effort decision situation. Now describe how a consumer would make this decision using each of the following: (a) compensatory brand-processing models, (b) compensatory attribute-processing models, (c) noncompensatory brand-processing models, and (d) noncompensatory attribute-processing models. Explain how you would design a marketing effort to influence each of these strategies. Answer: • Compensatory Brand-Processing: Evaluate brands overall. • Compensatory Attribute-Processing: Compare features. • Noncompensatory Brand-Processing: Choose preferred brand. • Noncompensatory Attribute-Processing: Meet specific criteria. Marketing Strategy: • Compensatory: Emphasize overall value. • Noncompensatory: Focus on critical criteria. 7. As a group, select a decision context in which the decision could be based on both cognitive and affective processes. Describe how the decision would be made differently using these different processes. Discuss the marketing implications of these types of processing. Answer: • Cognitive: Based on facts (e.g., vacation costs). • Affective: Based on emotions (e.g., dream destination). Marketing Implications: Use rational appeals for cognitive and emotional appeals for affective. 8. Explain how motivation, ability, and opportunity to process information influence the choice process. Answer: • Influence: Determines effort, information processing, and access. 9. Explain how the amount of information can influence the decision process. Knowing this, describe how you would provide information to someone for a high-effort decision. Answer: • Influence: Too much or too little can affect decision-making. Strategy: Provide concise details with options for more in-depth information. 10. Describe decision framing. Explain how it affects the decision process. Discuss how marketers can influence this process. Answer: Definition: Presenting information to influence decisions. Effects: Alters perceptions of value or risk. Marketing Influence: Frame offers to highlight benefits or reduce perceived risks. EXPERIENTIAL EXERCISES AND CLASSROOM EXAMPLES Students who learn more readily through visual and tactile stimuli will benefit from the introduction of physical examples into the classroom. 1. “From Soup to Nuts” Exercise Have students keep diaries of their purchase/consumption behavior for a week. At the end of the week, ask them to select the three purchases that differed the most in terms of the underlying choice process, then compare and contrast the purchases on relevant dimensions. Talk about the reasons for the differences and similarities. 2. “Back to School” Exercise* Select four different colleges profiled in a publication such as Barron’s. The colleges should be chosen based on their likely appeal to students in the class. In general, the four should include private and public institutions, large and small student bodies, strong and weak athletic teams, active and less active Greek communities, etc. Edit and condense the profiles down to a few paragraphs, along with information about average SAT scores, selectivity, faculty-student ratios, and size. Remove or obscure the names of the schools, then make a copy of the four profiles for each student in the class. Tell students to pick a school based on information in the profiles. Discuss the reasons for their choices and the processes they used in decision-making. IN-CLASS ACTIVITY Working with Consumer Knowledge Your task is come up with an advertising and/or promotional campaign for a brand of your choice that works with consumers’ existing knowledge structure and memory. You can focus either on the brand as a whole or on a specific product or product line. Some approaches you may want to consider: • Increasing awareness of a brand or increasing memorability of the brand or related information (e.g., web site address, phone number) • Creating additional associations for a brand • Ads that use priming to make consumers receptive to favorable beliefs • Tying a product into a consumer associative network of knowledge • Influencing a brand schema and/or personality • Integrating a specific brand name into a script (either focusing on the choice of the specific brand to represent the product category [e.g. Pillsbury flour] or presenting the brand as a means of accomplishing a specific task [e.g., Brawney paper towel helps fix messes when children’s friends come over] • Graded structure—trying to promote or enhance a brand’s stature as the product category prototype • Integrating the brand into goal derived categories • Strategies to prevent decay of brand knowledge or to generally enhance recall • Creating ads to facilitate retrieval by frequently occurring retrieval cues. Creativity—within limits of good taste—is encouraged. Please prepare a brief talk to the rest of the class discussing your conclusions. The presentation should not exceed 2.5 minutes in length. CLASSROOM GROUP ACTIVITY Interviewing to Expose Decision Processes: 40 Minutes I. Start Up A. Purpose of the activity 1. This activity will give students an opportunity to practice an interview effort to learn how consumers make decisions in a brief classroom exercise. B. What the instructor will do 1. The instructor will divide people into small groups, and assign them roles (interviewer, interviewee, and recorder/observer). C. What the participants will do 1. The participants will work in small groups to study how concepts related to decision making can be studied in consumers. After a period of small-group discussion, they will make reports to the larger group. D. Rules for this experience 1. Groups are to work separately from each other. Individuals should rely on their knowledge from the book and may refer to their notes and the book as necessary. II. Experience A. Group up. 1. Have students form groups of no more than five. This exercise will work in groups of any size; however, room restrictions that do not allow for moving furniture may make group work more difficult. If necessary, this exercise can be run in a “fish bowl” format with two students put in the front of the classroom, and most students observing and recording their own thoughts. Several pairs might be run during a single class session. B. Specific actions for groups 1. The groups are responsible for selecting a product for which a high-effort decision would be required (alternatively, this could be assigned). 2. Next, the roles of interviewer, interviewee, and recorder/observer should be assigned (or self-selected). 3. The interviewer should then proceed to ask the following questions, probing as necessary to learn more about the interviewee’s answers. a) Which brands would you consider (eliciting a consideration set)? b) How would you go about making a decision among these? c) Based on that process, which brand would you be most likely to choose? 4. Based on the notes and observations of the group members, they should then prepare an analysis using the following questions: a) How did the descriptions provided by the interviewee compare to the decision models discussed in this chapter? b) How are these processes likely to vary across consumers? c) Why did this consumer choose one brand over another? d) If this person was representative of a certain segment, how would knowing that help in developing a marketing strategy? 5. Large-group discussions a) First, have groups present their ideas about the first question, and then proceed to discuss each of the subsequent questions. b) If there are many groups, share the discussion among all groups, though not all groups may answer all of the questions. III. Debrief and Unveil Concepts. A. Discuss the activity itself. 1. The purpose of this discussion is to allow students to express what they felt about the experience itself. 2. Ask students to describe their experiences of doing the activity. a) Likes and dislikes about what just happened b) How they felt during the experience c) What is realistic, unrealistic about the exercise? d) What will be different when they do this for their own brand? B. Discuss the content of the experience. 1. The purpose of this discussion is to ensure that students “take away” important learning points. 2. Ask students to describe the important points the experience teaches. a) The role of different high-effort judgment strategies among consumers 3. Use the chalkboard to record student responses. a) Write down their ideas as they are presented. b) Concentrate on the principles being discussed rather than the examples being used. c) Help them to see the interrelationships among their responses. IV. Execute A. Apply what has been learned. 1. Lead a discussion on how the concepts can be applied in organizations. a) What barriers may be faced in applying the concepts from the exercise? b) What can be done to help others understand the concepts when you use them at work? B. Transfer and use the knowledge. 1. Encourage students to make a record in their notes about how they will use the ideas in the workplace. 2. Even if they do not have a specific job, how will they remember to use what they have learned? “Harley, the Century-old Iconic Brand,” Economic Times (India), November 6, 2011, www.economictimes.indiatimes.com; “Harley Davidson Enjoys Romance with Indian Women,” Economic Times (India), July 19, 2011, www.economictimes.indiatimes.com; Arathi Gunnupuri, “Harley Davidson India Opens for ‘Mum bikers,’” CNN Go, September 22, 2010, www.cnngo.com; Sara Sidner, “Harley-Davidson To Build Bikes in India,” CNN, November 4, 2010, www.cnn.com; Penny MacRae, “Harley-Davidson ‘Hogs’ Ride into India,” Asia One, July 18, 2010, www.asiaone.com; and Rudraneil Sengupta, “Anoop Prakash, Man Behind the Machine,” Livemint.com, September 2, 2011, www.livemint.com. Solution Manual for Consumer Behavior Wayne D. Hoyer, Deborah J. MacInnis, Rik Pieters 9780357721292, 9781305507272, 9781133435211