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55 Cards in this Set
- Front
- Back
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Heuristics |
"Rules of thumb" that people use to make judgments and decisions
Mental shortcuts that reduce the cognitive burden associated with decision making |
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Perceptual Heuristic |
Consumers pay attention to certain stimuli but not others
Ex: Tim Horton's new sized drink - consumption increased 30% because people thought they consumed less
Ex: Bottomless bowls, eat more; Pour and drink more in tall, narrow glass rather than wide |
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Availability Heuristic |
Mental shortcut which relies on immediate examples that come to mind when evaluating a specific topic, concept, method or decision (think: the media, news)
Ex: People reading a list of people, we are more likely to remember the famous people listed since they're familiar |
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Representativeness Heuristic |
Used when making judgments about the probability of an event under uncertainty, comparing mental prototypes (stereotypes)
Ex: Sarah loves to listen to new age music and read horoscopes. Is she a holistic healer or a school teacher? Most would say the first, but probability wise, it's probably the second |
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Confirmation Bias |
Tendency to search for, interpret or remember information that confirms ones beliefs or hypotheses
Ex: |
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Hindsight Bias |
When consumers feel like they "knew it all along" and believe an event is more predictable after it comes known than it was before it became known
Related to post-purchase regret?
Ex: Senior management uncovered "warning" signs that they should have noticed after termination of an employee |
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Willful Ignorance |
Consumers avoid requesting information to preserve their feelings
Implications - mangers whose products contain positive ethical information should make it readily available, managers who are the opposite needn't worry because it's unlikely that the consumer is going to ask |
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Price Expectations |
Assuming that the higher priced product is higher quality
Ex: Jeans from Walmart vs. designer jeans |
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Marketing and Value Creation |
Creating value through pricing, advertising, packing and ambience |
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Context Effects |
Influence of environmental factors on one's perception of a stimulus
Ex: Serving food on a smaller plate makes it seem like you're eating more
Ex: Willing to spend more for a smaller set with everything in tact, than a larger set with the same things in tact, but also some broken pieces
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Context Effect - The Attraction Effect |
When you want the consumer to choose X over X and Y, you add a slightly defective version of X (X'), making it the more attractive option
Ex: Faces |
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Context Effect - The Compromise Effect |
Marketers add an extreme option to make consumers choose the "middle" option
Ex: Adding a 17" computer to the list of a 13" and 15" so people buy the 15" |
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Prospect Theory |
Describes the way people choose between probabilistic alternatives that involve risk, where probabilities are known
People make decisions based on the potential value of losses and gains rather than the final outcome |
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Diminishing Sensitivity |
The property that changes in a variable have less impact the farther the variable is from a reference point
Ex: If you had $20 and lost $10 it would seem like a bigger loss to you than if you had $100 and lost $10 regardless of the fact that the total loss is the same |
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Loss Aversion |
When people are very interested in avoiding loss more than acquiring gains.
Losing money disturbs you more than if you receive money
Ex: |
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Framing |
People are more likely to react in different ways to a situation depending on if its presented as a loss or a gain
Ex: People choose a surgery with a survival rate of 90% over a survey with a mortality rate of 10% |
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Symbolic Consumption |
Consuming something for what it means not for what it does |
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Purely functional consumption |
Consuming something for its specific function |
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Mere experiential consumption |
Consuming for sensory pleasure or stimulation |
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Personal Meanings |
Connect WITH the product -express self-identity -symbolizes personal history, achievements -Enhances consumer's appearance
Connect THROUGH products -represents interpersonal ties (gifts, symbols of family history) -facilitates interpersonal ties
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Cultural Meanings (list) |
Consumption Community Cultural Bedrock Social Role/Identity |
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Consumption Community |
Sense of belonging, shared rituals among users |
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Cultural bedrock |
Meanings with solid, enduring foundations or values (Nike, just do it), Historical moments (VW Beetle w/ Hippies) or cultural archetype (Marlboro Man) |
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Social Role/Identity |
Emblematic of well-known roles (businesspeople, housewife, hipsters) |
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Cultural Resonance "Cultural Branding" |
Idea - sometimes our worldview and the social/economic reality don't match. At those times a good marketing strategy creates a message/story (the myth) that helps to resolve this conflict
An iconic brand is the performer of and container for a resonant identity myth that addresses an acute contradiction in society |
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Budweiser MYTH MARKET example |
Identity project - white, middle class American men as the successful breadwinners Prevailing ideology - suburban good life Contradiction - crisis of manhood, consumers cannot be men of action when America loses the economic battle
Myth market - men of action hero - working men are men of action too, their hard work is crucial for America's comeback |
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Mental Accounting |
The process by which people code, categorize and evaluate economic outcomes
The way a person frames a transaction in their mind |
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Sunk Cost Fallacy |
When people make decisions about a current situation based on what they have previously invested in the situation
Ex: Patriots game in the freezing cold - free vs. paid tickets |
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Nudging Consumers |
Nudge - any aspect of the choice architecture that alters people's behavior in a predictable way without forbidding any options or significantly changing their economic incentives
Ex: Grocery store design, arranging food, "flies" in urinals |
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Valuation |
Tastes are created by the context and presentation of a product
Ex: Junk pearls become a "have to have" object |
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Numerical Cognition (list) |
Price Partitioning Transaction Decoupling |
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Price Partitioning |
Separating one-time costs Splitting costs so that product cost appears less
Ex: Instead of charging $39.99, charge $30 and $9.99 shipping |
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Transaction decoupling |
Allows the consumer to tightly link the costs and benefits of the transaction and easily "assign" a purchase price and benefit from the transaction
Ex: One day ski lift ticket vs. four day ski lift ticket Consumer can directly link the fun had each day |
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Price Knowledge |
Consumers are rarely aware of the prices of commodity items and are thus susceptible to "sales" and "promotions" |
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Conformity |
Tendency for an individual to behave as the group behaves |
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Compliance |
Doing what the group or social influencer asks |
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Automaticity of Compliance |
Giving a reason for an action creates a greater likelihood of compliance
Ex: "Can I use the copy machine I need to copy something" over "Can I use the copy machine" |
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Sources of Influence |
Marketer vs. Non-marketer Mass Media vs. Personal |
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Six Weapons of Influence |
Reciprocity Commitment and consistency Social Proof Liking Authority Scarcity |
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Types of Reference Groups (list) |
Aspirational - groups we admire (celebrities, teachers)
Associative - groups we belong to (brand community, student)
Dissociative - groups we disapprove of (gangs, neo-Nazis) |
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Types of Influence (list) |
Normative Influence - conformity through compliance
Informational Influence - reference groups as experts |
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Normative Influence - Types of Norms (list) |
Descriptive Norms - perceptions of what behaviors are common or popular (most students drunk moderately) WHAT PEOPLE ARE ACTUALLY DOING
Injunctive Norms - perceptions of which behaviors are accepted or rejected by by society (9 out of 10 students disapprove of binge drinking) WHAT PEOPLE OUGHT TO BE DOING |
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Bystander Effect |
Diffusion of responsibility
Ex: Kitty Genovese murder |
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Word of Mouth - why do we share? |
Impression management Emotion Regulation Information acquisition Social Bonding Persuasion |
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What makes online content viral? |
Social Currency Triggers Emotion Public Practical Value Stories |
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Controversies in Marketing |
Acquisition - targeting vulnerable consumers, addiction
Consumption - overeating and obesity
Disposition - trashing vs. recycling |
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Protecting Consumers |
What consumers? - children, elderly, low knowledge
Government regulations on tobacco, comparison advertisements and pharmaceutical advertising |
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Unethical Marketing Practices (examples at each level) |
Product - labeling food as fresh when it contains preservatives Price - price fixing, differential pricing Promotion - misleading claims about effectiveness Distribution - "bait and switch" Packaging - Changing packaging to deceive consumers about thinking its the same quantity |
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Increasing vs. Decreasing Regulations |
Pro of Increasing - Protect consumers Pro of decreasing - decreases costs for organization, savings passed on to consumers Con of increasing - increased costs for organization, passed on to consumers Con of decreasing - may result in consumers being ripped off |
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Methods of Intervention/Protection |
Government imposed - regulation Industry self-regulation Incentives - tax breaks for charitable donations Complaints handling - usually self-regulatory but can be imposed Consumer education - pamphlets, warning labels |
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Prosocial Behavior |
Acting in a manner that benefits others
Consumer behavior research can be used to encourage these behaviors
Self-identity - material possessions can form part of the self
Product distortion - less likely to recycle |
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Social responsibility in marketing |
Can encourage conservation behavior, giving to others, spending on others rather than just using the knowledge to make money |
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Happy Money - 3 strategies |
Make it a choice Make a connection Make an impact
Increases consumer satisfaction and makes them more likely to continue the behavior |
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Endowment Effect |
People value their own goods higher than ones that they don't own
Ex: Willing to pay less for a ticket than they would sell it for. People place more value on a ticket they own. |
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Numerical Cognition |
Likelihood of wanting to pay $4,99 over $5.00 |
