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Week 8 - Coggle Diagram
Week 8
High Effort Decision Making
Which brands to consider?
Process of narrowing down options from true brand universe to the awareness set to the consideration set. Very similar as with low involvement situations.
Influence of consideration set composition on choice
Compromise effect = relies on the finding that people are averse to extreme options. Extreme options are associated with risks
There is an increase in choice probability when an option is seen as a safe middle ground
Especially likely when there is high uncertainty or when customers are specifically concerned with making the wrong decision
Marketing implications: - Adding a more expensive option to a product line might increase the the sales of a lower priced object from the same line, as they are seen as a compromise.
Attraction effect= When the addition of an inferior brand to the consideration set increases the attractiveness of the options it is compared to
Marketers can compare their brand to inferior competitors
Marketers can introduce a product from the same line which is inferior on some aspects to increase the sales of the dominant options.
What is important to the choice?
Goals
Consumers goals will affect the criteria they find important, and this, in turn will affect their choice
Time
When target event is far in the future, we represent it more abstractly. Desirability considerations are more important.
When target event is close in time, we represent it more concretely. Feasability/convenience considerations are more important.
What options to choose?
Compensatory choice model
A mental cost - benefit analysis model in which negative features can be compensated for the positive ones
Involves consideration of attributes and importance of each of the attibutes
Trade offs between pros and cons
Laborious process which is mostly done for very very high involvement situations
Multi attribute expectancy value model
A brand based compensatory choice model
Involves choosing the option with the greatest overall value
Consumers not only evaluate the attributes of the offering but they evaluate the importance of each of these attributes
Non compensatory choice model
A simple decision model in which negative information leads to the rejection of an option
Conjunctive model
A brand based non compensatory choice model.
Evaluates one option at a time
Sets minimum cutoff levels for all relevant attributes
Select first brand meets cutoff along all attributes
First brands considered have huge advantage over other brands
Lexicographic Model
Attribute based
Compare one attribute at a time (across options, in order of attribute importance
If one option dominates the others on most important attribute, it is chosen; otherwise, proceed to the next most important attribute
Marketers should highlight the importance of the one attribute which your brand excels. make this the diagnostic attribute
Processing by brand = Evaluating one brand at a time
Processing by attribute = Evaluating one attribute at a time
Decisions based on gains and loses
Prospect theory
The pain experienced from a monetary loss if greater than the satisfaction experienced from a win
Losss aversion: the tendency to prefer avoiding losses than acquiring gains
Framing implications in loss aversion
Focusing on the gain vs loss associated with choice options or on the positive or negative aspects of choice options
People are more likely to chose a product when information about it is framed in terms of gains
Consumers are more likely to delay making a decision when the choice options are framed in terms of losses
Consumers are more likely to be more risk averse for decisions when the choce options are framed in terms of losses
Judgement vs decision making
judgement = evaluation of an object or estimate on the likelihood of an event happening
we tend to make judgement before a decision happens
Decision Making
Chosing among different options or courses of actions
Biases in high effort judgement
Anchoring and adjustment
People make estimates starting from an initial value point - the anchor - and adjust from there
Adjustments however are tyupically insufficient
Different starting points yield very different estimates and decisions
First impressions are important!
Sales tactic, start with the highest price at the start of negotiations (high price works as anchor)
Multiple unit pricing