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Lecture 8: Decision Making (Heuristics: Mental Shortcuts "Mental…
Lecture 8:
Decision Making
Types of Decision Making
Habitual
• Automatic decision-making (snap judgements with little info)
Affective
• Letting emotions guide our choice
Cognitive
• Thoughtful & rationally
Cognitive purchase decision
The
outcome
of a
series of stages
that
results in the selection of one product
over competing options
Steps in the Decision-Making Process
1. Problem Recognition
Need Recognition
Actual state declines, triggering a desire to return to normalcy
(e.g.: running out of fuel while driving :fuelpump:)
Opportunity Recognition
Ideal state moves upward/ recognizes an ideal state he/ she wishes to achieve
(e.g.: wants a newer car :car:)
2. Information Search
•
Pre-purchase
(
Takes place before purchase
) and
Ongoing search
•
Internal searches
(Own memory banks) and
external sources
• E.g.:
Cybermediaries
(Filter options. Trivago),
Intelligent agents
(Softwares using collaborative filtering, learn from past user behaviour to recommend new purchases),
Search engine optimization
3. Evaluate Alternatives
Evoked Set
alternatives the consumer knows about
Consideration Set
Seriously considering
Evaluative criteria
dimensions used to judge the merits of competing options
Determinant attribute
attributes used to differentiate among our choices (those that stand out)
4. Product Choice
:check: Compensatory Rule
•
Simple Additive Rule
(add up to find highest total)
•
Weighted Additive Rule
(multiply the digits with the preferred digits)
:green_cross: Non-compensatory Rule
• Lexicographic Rule
(according to rank)
•
Elimination-by-aspects Rule
(eliminate those below min. required level)
5. Post-purchase Evaluation
Heuristics
: Mental Shortcuts
"Mental rule-of-thumb"
Covariation
• Associate events that may/ may not actually influence one another
• Occurs when lacking information
(e.g.: clean car= good mechanical condition)
Country of Origin
Familiar Brand Names
Higher Prices
Biases
in Decision-Making Process
Prospect theory
• How the value of a decision depends on gains/ losses
• Marketers may :arrow_up:$ before putting "50% off" - still profiting - customers may feel as if they will gain from purchasing it
Sunk-cost fallacy
• Reluctant to waste something paid for
Framing
• How one poses the question/ info matters
