MKTG 322 Exam 2

Over how many consumers predict spending?

70%

What percentage of Americans who own a smartphone use at least one personal finance app?

63%

Asking yourself, "How much money will I spend next week?" is equivalent to saying what?

How much will I spend on average

accessibility

the ease with which information comes to mind

heuristic

cognitive shortcut or rule of thumb; an easily accessible piece of information that aids in decision making.

when faced with a difficult decision, we often answer an easier one instead consciously or unconsciously?

unconsciously

why do heuristics matter?

to aid in decision making

judgement

evaluations or estimates regarding the likelihood of events

bias

predictable, systematic deviation from objective standard

expense prediction bias

the under prediction of future expenses

why are the "average" predictions problematic?

Mode

mode

most often

mean

ave

median

the middle number when lined up greatest to least

prediction is the: mean, mode, or median?

mode

reality is the: mean, mode, or median?

mean

income prediction bias

the over production of future income

in the income prediction bias, the mean is _____ the mode

less than

in the expense prediction bias, the mean is _____ the mode

greater than

affective forecasting

consumers predictions of how they will feel in the future

WHAT will I feel

valence (good or bad) nature of feeling (specific emotion)

HOW much will I feel it

intensity

HOW LONG will I feel this way

duration

durability bias

over predicting the emotional impact of future events

focalism

overweighting one slice of information

problem recognition

the PERCEIVED difference between an ideal and an actual state.

problem recognition is the ____ step of the decision-making process

first

ideal state

the way consumers would like a situation to be

actual state

the real situation as consumers perceives it now

T/F: problem recognition occurs if consumers become aware of a discrepancy of an ideal state and an actual state

True

internal search

process of recalling stored information from memory. naturally limited by consumer's ability to store and process

T/F: recognition is far easier than recall

True

consumers recall

brands attributes e

consumer decision making is influenced by ______

accessibility

base rate information

objective truth about how often an event really occurs on average. often ignored due to biases

the "law" of small numbers

intuitive belief that small samples are accurate (ex: getting bit by a shark)

are decisions based off heuristics dumb?

no because it simplifies our decision making

survival bias

focusing on causes of success rather than causes of failure. another examples of focalism

the planning fallacy

understanding project completion times (your plan vs. reality)

why do we underestimate

we focus on the future and ignore relevant experiences in the past

system 1

fast, automatic, effortless, intuitive. this is where heuristics live

system 2

slow, deliberate, effortful, rational. this is where logical reasoning lives.

when does system 2 kick in?

when we say so...except sometimes; when the task seems difficult

T/F: we have a tendency towards focalism

true

T/F: accessibility determines our focus

true

reference point

basis or standard for evaluation

anchoring and adjustment

decisions are often anchored on a reference point, then adjusted up or down

choice overload

large selection can grab consumers' attention, but it can also result in fewer purchases when too much choice is paralyzing

solution for choice overload

categorization

maximizers

look for the best option and tend to make more money

satisficer

look for the good enough option and are happier

classical economic perspective

consumers are rational; they integrate as much information as possible and make fully informed decisions and manage to maximize their utility (ex: satisfaction). this perspective is normative and is how we should act

behavioral economic perspective

factors like heuristics, bias, framing effects, and emotions prevent us from acting like rational agents. this perspective is descriptive and captures how we actually believe

internal decisions influenced by:

accessibility heuristics biases

external decisions influenced by:

defaults compromise/ decoy effects framing effects

T/F: reference group (or individual group member) of relevance to a consumer's choices and behavior

true

factors that make up a group or reference group

propinquity group cohesiveness mere exposure

propinquity

physical and psychological proximity

group cohesiveness

degree to which members of a group are attracted to each other and value their group membership

reference group #1: the "in-group"

social group in which we belong to

reference group #2: the aspirational "out-group"

groups to which we aspire to belong, or group members who we aspire to be like

reference groups #1 and #2 are influence by ______

conformity

reference group #3: the dissociative "out-group"

groups (or individuals) that stand in contrast to self-identity

what influences reference group #3?

dissociation

social norms

a group's customs, traditions, standards, rules, values, etc.

why are social norms so powerful?

need for affiliation

fundamental human desire to feel a sense of connection, association, and similarity with other people

descriptive norms

convey information about what other people commonly do

when can descriptive norms backfire?

suicide prevention programs, eating disorder awareness, parties with people who have covid-19

how do we solve descriptive norms?

injunctive norms

injunctive norm

convey information about what we should or should not do

when does social rejection increase liking?

rejection comes from an aspirational brand brand must represent the consumer's ideal self salesperson must reflect the brand image

why does social rejection increase liking?

need for affiliation

need for uniqueness

desire to differentiate oneself from others

T/F: need for uniqueness modifies need for affiliation but does not replace it

true

choice architecture

structure of a decision environment

the default effect

consumers tend to stick with pre-selected options

why are defaults so powerful?

social proof decision ease focalism

why are defaults ineffective?

when consumers have strong beliefs

the compromise effect

consumers tend to choose in the middle because most people are hardwired to avoid extremes

the decoy effect

creating a decision environment in which one option is clearly dominated

loss aversion

consumers are risk averse with respect to gains, but not losses

nudge is...

any aspect of the choice architecture that alters people's behavior in a predictable way without forbidding any option. must be easy and cheap to avoid

sludge is...

a process more difficult in order to produce an outcome that is not in a consumer's best interest (ex: cancelling subscriptions)

nudges include:

defaults decision options decision frames

nudges are:

cheap easy to implement highly influential

present bias

people tend to accept less now than more later because risk aversion

loss aversion 2

psychological pain associated with giving something up

endowment effect

we overvalue what we own because loss aversion

sunk cost fallacy

continuing an action because of an unrecoverable investment rather than a rational decision that will maximize present utility because loss aversion

quiet signalers

subtly signal in-group membership to each other

loud signalers

explicitly signal dissociation from lower SES people

non-signalers

do not engage in signaling because they do not have the SES or desire to do so.

wannabe signalers

aspire to be like high SES loud signalers and therefore try to mimic them

marketing influences body image via

social comparison

social comparison can be both of these

upward or downward

Conventional wisdom in marketing has been to trigger _______ comparison by presenting consumers with images of an “ideal self”

upward

marketers do not only ___ segments, but marketing can also ______ create segments

identify; create

changes over time and can differ across cultures at any given point in time

segmentation variables

culture shapes our values, norms, and _____

rituals

ritual

set of symbolic behaviors that occur in a fixed sequence; often repeated periodically

ritual artifact

an item used in the performance of rituals

MKTG 322 Exam 2

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