CHAPTER 9

INDIVIDUAL DECISION MAKING

Multiple Choice

1. The first stage in the consumer decision-making process is: a. information search. b. evaluation of alternatives. c. problem recognition. d. product choice.

Answer: (c) Difficulty: (E) Fact Page: 292-293, Figure 9.1

2. Jeff is tired of the numerous breakdowns and peeling paint on his old car. When Jeff begins to actively think about his car in this way, which of the following consumer decision-making process steps is Jeff going through? a. Information search. b. Evaluation of alternatives. c. Problem recognition. d. Product choice.

Answer: (c) Difficulty: (E) Application Page: 292-293, Figure 9.1

3. Jeff has compared several models of cars for about two months and has finally decided to buy a red Volkswagen from a local dealership. Based on the stages of the consumer decision-making process listed below, which stage most appropriately describes Jeff’s current position? a. Information search. b. Evaluation of alternatives. c. Problem recognition. d. Product choice.

Answer: (d) Difficulty: (E) Application Page: 292-293, Figure 9.1

4. Traditionally, with respect to decision making, consumers calmly and carefully integrate as much information as possible with what they already know about a product, painstakingly weigh the pluses and minuses of each alternative, and arrive at a satisfactory decision. This process most closely resembles which of the following perspectives? a. Rational perspective. b. Behavioral influence perspective. c. Experiential perspective. d. Risk perspective.

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Answer: (a) Difficulty: (M) Fact and Application Page: 292-293

5. Consumers often accelerate their speed on the path to purchase because of initial impulses. It is almost as if the consumer gets “revved up” for a spending spree. In formal consumer behavior terms what would such an action state be correctly named? a. Drive. b. Purchase desire. c. Purchase cues. d. Purchase momentum.

Answer: (d) Difficulty: (M) Fact and Application Page: 293

6. If a decision is made primarily under conditions of low involvement and is a response to environmental cues, that decision is best classified as being made from which of the following perspectives? a. Rational perspective. b. Behavioral influence perspective. c. Experiential perspective. d. Risk perspective.

Answer: (b) Difficulty: (M) Fact and Application Page: 293-294

7. Ruby Thomas is the manager for woman’s plus-size specialty store. She believes that her store is enticing to her target market customers because each customer has a private fitting room with a knowledgeable staff person to assist in wardrobe choices. In this case, Ms. Thomas is following which of the following perspectives with respect to consumer decision-making? a. Rational perspective. b. Behavioral influence perspective. c. Experiential perspective. d. Risk perspective.

Answer: (b) Difficulty: (M) Fact and Application Page: 293-294 8. If the Gestalt (or the totality) of a situation is stressed in making a consumer decision, which of the following perspectives is being followed? a. Rational perspective. b. Behavioral influence perspective. c. Experiential perspective. d. Risk perspective.

Answer: (c) Difficulty: (H) Fact and Application Page: 294

9. If the purchase of a product is characterized by the fact that the product is an expensive product, is purchased infrequently, has high consumer involvement,

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(because the consumer is unfamiliar with the product), extensive thought is given to the purchase of the product. Which of the following stages of the buying decision behavior continuum most closely matches the above example? a. Routine response behavior. b. Graduated response behavior. c. Limited problem solving. d. Extensive problem solving.

Answer: (d) Difficulty: (M) Application Page: 295-295, Figure 9.2, Table 9.1

10. Chet decides to buy a new hedge trimmer to care for his bushes and shrubs. Since Chet is familiar with the local lawn and garden shop and the brands that are carried there, he uses a few simple decision rules to arrive at a purchase option. Chet is following which of the following buying decision behavior continuum alternatives to make his decision? a. Routine response behavior. b. Graduated response behavior. c. Limited problem solving. d. Extensive problem solving.

Answer: (c) Difficulty: (M) Application Page: 295, Figure 9.2

11. Ridley Brown admits that he makes most of his food choices with an automaticity that drives his friends crazy. He eats hamburgers on Monday, chili on Tuesday, steak on Wednesday, chicken on Thursday and so on. He likes order in his life and sees no reason to change. In all likelihood, Ridley probably used which of the following types of decision making styles to provide this order to his food selection process? a. Routine response behavior. b. Graduated response behavior. c. Limited problem solving. d. Extensive problem solving.

Answer: (a) Difficulty: (M) Application Page: 295, Figure 9.2

12. _______________________ occurs whenever the consumer sees a significant difference between his or her current state of affairs and some desired or ideal state. a. Problem recognition b. Information search c. Evaluation of alternatives d. Evaluation of the evoked set

Answer: (a) Difficulty: (E) Fact Page: 296

13. Considering how problems can occur, if a consumer runs out of gas on a long trip, then which of the following situations would be most appropriate or true? a. The quality of the person’s actual state has moved downward.

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b. The quality of the person’s actual state has moved upward. c. The ideal state has moved upward. d. The ideal state has moved downward.

Answer: (a) Difficulty: (M) Fact and Application Page: 296

14. Considering how problems can occur, if a consumer craves a newer, flashier car, then the consumer’s ideal state can move upwards. Which of the following terms matches this new state? a. Need recognition. b. Need deprivation. c. Opportunity recognition. d. Opportunity capitalization.

Answer: (c) Difficulty: (H) Fact and Application Page: 296

15. If the Milk Producer’s Association of America runs an ad that says, “Drink Milk Just for the Health of It!” then the association is appealing to which of the following types of demand? a. Primary demand. b. Secondary demand. c. Kinked demand. d. Inertia demand.

Answer: (a) Difficulty: (E) Page: 296

16. If we were to draw a diagram where a consumer’s ideal state was very near to his or her actual state, which of the following terms would most likely describe the degree of problem recognition that would be occurring? a. Opportunity recognition. b. Need recognition. c. Opportunity capitalization. d. No problem.

Answer: (d) Difficulty: (H) Page: 297, Figure 9.3

17. ___________________ is the process by which the consumer surveys his or her environment for appropriate data to make a reasonable decision. a. Problem recognition b. Evaluation of alternatives c. Information search d. Product choice

Answer: (c) Difficulty: (E) Fact Page: 297

18. Jimmy loves to go to CompUSA and just browse through the latest in video games

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and newest computer software. He often spends two hours just looking and talking to other customers and salespeople about his interests. Which of the following search forms BEST describes what Jimmy is doing? a. Prepurchase search. b. Vicarious search. c. Random search. d. Ongoing search.

Answer: (d) Difficulty: (M) Application Page: 297-298, Table 9.2

19. Steven Stuart was exposed to information about stocks and bonds at an early age. His mother and father always had financial brochures that prompted discussions about financial affairs at the dinner table when he was a kid. When it came time to plan for his own financial future, he was surprised at the amount and depth of information that he had retained because of these brief childhood experiences. Which of the following learning forms describes what happened to Steven? a. Overt learning. b. Vicarious learning. c. Incidental learning. d. Psychological learning.

Answer: (c) Difficulty: (H) Application Page: 298

20. Kent is a loyal Coca-Cola drinker. As a college student, he averages about six Cokes a day. He even prefers Cokes to water. However, today when he passes a vending machine in his dorm, he buys a new flavor of soft drink called Big Red. Which of the following most appropriately explains his behavior, given the facts about Kent’s previous behavior? a. Kent is brand switching. b. Kent is variety seeking. c. Kent is influenced by advertising. d. Kent is influenced by peer pressure.

Answer: (b) Difficulty: (H) Application Page: 298-299

21. People often make decisions on the basis of a mental accounting. One facet of this accounting is making a decision based on the way that a problem was posed. This is called: a. the sunk-cost fallacy. b. loss aversion. c. framing. d. positioning.

Answer: (c) Difficulty: (M) Fact Page: 300

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22. Les just bought a megaphone of root beer. As he drinks from the giant cup, he eventually becomes full. One of his friends comments, “If you don’t stop drinking that stuff, you will get sick.” Les replies, “Hey, I bought it and I am not going to waste one drop of it.” Les’s behavior could best be described by which of the following mental biases to his decision-making process? a. The sunk-cost fallacy. b. Loss aversion. c. Framing. d. Risk positioning.

Answer: (a) Difficulty: (M) Application Page: 300

23. For most people, losing money is more unpleasant than gaining money is pleasant. This idea is at the basis of which of the following mental biases in decision-making? a. The sunk-cost fallacy. b. Loss-aversion. c. Framing. d. Risk positioning.

Answer: (b) Difficulty: (E) Fact Page: 300

24. As a general rule, search is greater when all of the following occur EXCEPT: a. the purchase is important. b. when there is a need to learn more about the purchase. c. when two people are involved. d. when the relevant information is easily obtained and utilized.

Answer: (c) Difficulty: (H) Fact Page: 302

25. Search tends to be the greatest among those consumers who are _______________ about the product. a. only slightly knowledgeable b. ignorant c. highly knowledgeable d. only moderately knowledgeable

Answer: (d) Difficulty: (H) Fact Page: 302

26. All of the following increase the likelihood that perceived risk will occur EXCEPT: a. the product is expensive. b. the product is complex. c. the product will be visible to friends and associates. d. the product is large in size.

Answer: (d) Difficulty: (M) Fact Page: 304

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27. Consumers with greater _______________ are less affected by perceived risks associated with the products they purchase. a. risk avoidance b. risk taking c. risk desires d. risk capital

Answer: (d) Difficulty: (M) Fact Page: 304

28. Which of the following types of perceived risk are most closely associated with the following buyer description: risk capital consists of self-esteem and self-confidence; those who are insecure and uncertain are most sensitive to this form of risk? a. Monetary risk. b. Physical risk. c. Social risk. d. Psychological risk.

Answer: (c) Difficulty: (M) Fact and Application Page: 304, Figure 9.6

29. Which of the following types of perceived risk is most closely associated with the following buyer description: risk capital consists of affiliations and status; those lacking self-respect or attractiveness to peers are most sensitive to this form of risk? a. Monetary risk. b. Physical risk. c. Social risk. d. Psychological risk.

Answer: (d) Difficulty: (M) Fact and Application Page: 304, Figure 9.6

30. Shawna believes she is a practical consumer. She is always on the lookout for better ways to order her life and make housework easier. New products that promise to help with these work tasks catch her eye. However, she sometimes makes mistakes in buying products that do not deliver on their promises to do the work required. Considering the above description, Shawna could be prone to which of the following types of perceived risk? a. Monetary risk. b. Functional risk. c. Social risk. d. Psychological risk.

Answer: (b) Difficulty: (H) Application Page: 304, Figure 9.6

31. The alternatives actively considered during a consumer’s choice process are his or her ______________. a. inert set. b. evoked set.

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c. inept set. d. declared set.

Answer: (b) Difficulty: (E) Fact Page: 305

32. Consumers often position products based on various levels of abstraction within a given product category. If a consumer sees ice cream as a fattening dessert, which of the following levels of abstraction would the ice cream belong in? a. Superordinate level. b. Ordinate level. c. Subordinate level. d. Basic level.

Answer: (c) Difficulty: (H) Application Page: 307, Figure 9.7

33. Jamie is considering ordering a dessert for lunch. Before she ever decides on the kind she prefers, she must decide whether to get a fattening or nonfattening dessert. This decision relates to which of the following levels of abstraction of dessert

categories? a. Superordinate level. b. Ordinate level. c. Subordinate level. d. Basic level.

Answer: (d) Difficulty: (H) Application Page: 307, Figure 9.7

34. _________________ are dimensions used to judge the merits of competing options. a. The evoked set b. Evaluative criteria c. A level of abstraction d. A product comparison

Answer: (b) Difficulty: (E) Fact Page: 309

35. Attributes actually used to differentiate among choices are called: a. evaluation attributes. b. search attributes. c. differentiation attributes. d. segmentation attributes.

Answer: (c) Difficulty: (E) Fact Page: 309

36. In order for a marketer to effectively recommend a new decision criterion, its communication should convey three pieces of information. Which of the following would NOT be among those pieces of information? a. It should point out that there are significant differences among brands. attribute.

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b. It should point out that there are significant differences between national and private (store) brands. c. It should supply the consumer with a decision-making rule. d. It should convey a rule that can be easily integrated with how the person has made this decision in the past.

Answer: (b) Difficulty: (H) Fact and Application Page: 310

37. Directories and portals, Web site evaluators, forums, fan clubs, and user groups are all forms of which of the following? a. Web retailers. b. Cybercash. c. Design groups. d. Cybermediaries.

Answer: (d) Difficulty: (E) Fact Page: 310

38. In the study of consumer behavior, another name for a mental or problem solving shortcut is a: a. “mommieism.” b. detail Rule. c. heuristic. d. experience Rule. Answer: (c) Difficulty: (M) Application Page: 311

39. Melissa has heard her mother say many times “Higher-priced products are higher- quality products.” This form of decision rule is called a(n): a. “Mommieism.” b. Detail Rule. c. Heuristic. d. Experience Rule. Answer: (c) Difficulty: (M) Application Page: 311-312

40. Mel Howard is determined to make his used car lot a successful business venture. One of the cornerstones of his sales strategy is to make every used car appear as if it just rolled off the assembly line. His cars are clean, clean, clean. Mr. Howard is relying on which of the following terms to send a signal of quality to his customers?

a. Demonstration signal. b. Product signal. c. Promotional signal. d. Design signal.

Answer: (b) Difficulty: (M) Application Page: 312-313

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41. All of the following are common market beliefs EXCEPT: a. coupons are generally rip-offs and not worth the time to collect them. b. all brands are basically the same. c. a store’s character is reflected in its window displays. d. largest-sized containers are almost always cheaper per unit than smaller sizes.

Answer: (a) Difficulty: (M) Application Page: 313, Table 9.3

42. The tendency for people to prefer products from their own culture to those of another culture is called: a. xenophobia. b. ethnographics. c. ethnocentrism. d. altruism.

Answer: (c) Difficulty: (M) Fact Page: 316

43. Latrell finds that every time he goes to select athletic shoes he always buys the same brand. In fact, he doesn’t even remember trying on any of the other competitive brands even though some of these brands have attractive styles and prices. Latrell’s purchase decision process has become one of less and less effort. Latrell’s decision process is an example of _______________. a. cognitive dissonance. b. brand loyalty. c. ineptness. d. inertia.

Answer: (d) Difficulty: (H) Application Page: 318

44. A survey indicated that consumers believed that there was no significant difference between brands of paper towels, soaps, and snack chips. This belief is due in part to which of the following? a. Brand loyalty. b. Brand parity. c. Brand mixing. d. Global branding.

Answer: (b) Difficulty: (M) Application Page: 319

45. Simple decision rules are ______________, meaning that a product with a low standing on one attribute cannot make up for this position by being better on another attribute. a. habit decision rules b. noncompensatory c. compensatory d. conjunctive rules

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Answer: (b) Difficulty: (M) Fact Page: 319-320

46. Chen Lo uses a decision rule that says “Only buy well-known brand names” when selecting a set of golf clubs. He does not look at price, the store, or even discounts when purchasing clubs. Chen Lo’s purchasing pattern is an example of a consumer using a: a. habit decision rule. b. noncompensatory rule. c. compensatory rule. d. conjunctive rule.

Answer: (b) Difficulty: (M) Application Page: 319-320

47. When the ___________________ of decision making is used, the brand that is the best on the most important attribute is the one selected. a. lexicographic rule b. elimination-by-aspects rule c. conjunctive rule d. compensatory decision rule

Answer: (a) Difficulty: (M) Fact Page: 320

48. When using the _______________ of decision making, brands are evaluated on the most important attribute but specific cutoffs are imposed. a. lexicographic rule b. elimination-by-aspects rule c. conjunctive rule d. compensatory decision rule

Answer: (b) Difficulty: (H) Fact Page: 320

49. When using the _________________ of decision making, a brand is chosen if it meets all the cutoffs but failure to meet any one of the cutoffs means it will be rejected. a. lexicographic rule b. elimination-by-aspects rule c. conjunctive rule d. compensatory decision rule

Answer: (c) Difficulty: (H) Fact Page: 320

50. If a consumer chooses the product alternative that has the largest number of positive attributes but does not throw out the product for not meeting all of the desired attributes, then the consumer is using a(n) ___________________ of decision making.

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a. lexicographic rule b. elimination-by-aspects rule c. conjunctive rule d. compensatory decision rule

Answer: (d) Difficulty: (M) Fact Page: 321

True/False

51. The first step in the consumer decision-making process is to conduct information search.

Answer: (False) Difficulty: (E) Fact Page: 292

52. Traditionally, consumer researchers have approached decision makers from a rational perspective.

Answer: (True) Difficulty: (M) Fact Page: 292

53. Olga decided to buy a product at her grocery store because of a “surprise special.” This is an illustration of the behavioral influence perspective at work in the decision-making process.

Answer: (True) Difficulty: (M) Application Page: 293-294

54. When Phyllis talks to her friends after school about buying a new evening gown, she is undergoing the evaluation of alternatives’ phase of the consumer decision making process. Answer: (False) Difficulty: (M) Application Page: 293, Figure 9.1

55. When a consumer makes a decision that stresses the Gestalt, then the consumer is following the behavioral influence perspective toward decision-making.

Answer: (False) Difficulty: (H) Fact and Application Page: 294

56. An example of a routine response behavior decision is one where the consumer is dealing with a familiar product class or brands.

Answer: (True) Difficulty: (M) Fact and Application Page: 295, Figure 9.2

57. Habitual decision-making is the lowest order of buying decision-making.

Answer: (True) Difficulty: (M) Fact Page: 295

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58. The highest risk and involvement for the consumer is found in the parallax method of problem solving.

Answer: (False) Difficulty: (M) Fact Page: 296, Table 9.1

59. Evaluation of alternatives occurs whenever the consumer sees a significant difference between his or her current state of affairs and some desired or ideal state.

Answer: (False) Difficulty: (M) Fact and Application Page: 296

60. Cedric runs out of gas. He thinks to himself “How stupid I am.” Cedric has just experienced a form of problem recognition that is being dominated by a downward movement in his actual state.

Answer: (True) Difficulty: (M) Application Page: 296-297, Figure 9.3

61. Claire remembers that wonderful taste that can only come from a “frosty mug” of root beer. As she heads to the soft drink aisle in her grocery store, she decides that today is the day to experience root beer again. Claire has just conducted what is called an internal search for information.

Answer: (True) Difficulty: (M) Application Page: 297

62. Incidental learning occurs after a very concentrated search for information.

Answer: (False) Difficulty: (M) Fact Page: 298

63. Variety seeking is especially likely to occur when people are in a bad mood because they are so “bummed” that they will try anything.

Answer: (False) Difficulty: (E) Fact and Application Page: 298

64. Decisions are influenced by the way a problem is posed. This is called framing.

Answer: (True) Difficulty: (E) Fact Page: 300

65. The loss aversion bias states that having paid for something makes us reluctant to waste it.

Answer: (False) Difficulty: (M) Fact and Application Page: 300

66. As a general rule, women are more inclined to search for information than men are.

Answer: (True) Difficulty: (M) Fact Page: 302

67. Search for information tends to be greatest among those consumers who are

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moderately knowledgeable about the product.

Answer: (True) Difficulty: (E) Fact and Application Page: 302

68. As a general rule, purchase decisions that involve extensive search also entail some kind of perceived risk.

Answer: (True) Difficulty: (M) Fact Page: 304

69. Sylvester is a financially poor college student. He tries to make every purchase decision a wise one because of his economic condition. Based on the types of risk mentioned in the text, Sylvester’s primary risk when making decisions would appear to be psychological risk.

Answer: (False) Difficulty: (M) Application Page: 304, Figure 9.6

70. The alternatives actively considered during a consumer’s choice process are his or her consumption boundaries.

Answer: (False) Difficulty: (H) Fact Page: 305

71. With respect to product categorization and the levels of abstraction associated with this categorization, a dessert category such as a pie is an example of a superordinate level of abstraction.

Answer: (False) Difficulty: (H) Application Page: 307, Figure 9.7

72. Evaluative criteria are the dimensions used to judge the merits of competing options.

Answer: (True) Difficulty: (E) Fact Page: 309

73. A shortcut to making a decision is called inertia.

Answer: (False) Difficulty: (M) Fact Page: 311

74. Jonesey will only buy the lowest-priced spark plug when he goes shopping for auto supplies. Since his car is very old, he really doesn’t care about any other qualities. Jonesy is using what is called the noncompensatory decision-making rule format.

Answer: (True) Difficulty: (M) Application Page: 319-320

75. The lexicographic rule of decision making states that the brand that is the best on the most important attribute is the one selected.

Answer: (True) Difficulty: (M) Fact Page: 320

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Essay Questions

76. List the five stages of the consumer decision-making process. Define each of the major stages. Provide an example that demonstrates how a consumer might progress through the model.

Answer:The five stages are problem recognition, information search, evaluation of alternatives, product choice, and outcomes.(a) Problem recognition occurs whenever the consumer sees a significant difference between his or her current state of affairs and some desired or ideal state.(b) Information search is the process by which the consumer surveys his or her environment for appropriate data to make a reasonable decision.(c) Evaluation of alternatives--during this phase the alternatives actively considered during a consumer’s choice process are his or her evoked set. This set comprises the products already in memory and other prominent ones from the retail environment.(d) Product choice--a product is or is not chosen to solve the buyer’s problem.(e) Outcomes--if a product is selected, it will either be satisfactory or unsatisfactory. If no product is selected, the process may begin again at a future time.

Example: See the example found in Figure 9.1 for an illustration.

Difficulty: (M) Fact and Application Page: 292-293, Figure 9.1

77. Briefly characterize the three perspectives on decision-making emphasized in the text.

Answer:The three perspectives on decision-making emphasized in the text were:(a) A rational perspective--in this view, people calmly and carefully integrate as much information as possible with what they already know about a product, painstakingly weigh the pluses and minuses of each alternative, and arrive at a satisfactory decision.(b) A behavioral influence perspective--under these circumstances, managers must concentrate on assessing the characteristics of the environment, such as the design of a retail outlet or whether a package is enticing, that influence members of a target market. Many times these decisions (made with this perspective in mind) are of the low-involvement type where store environment has an effect on the decisions to be made.(c) An experiential perspective--in these cases, no single quality may be the determining factor in the decision. This perspective stresses the Gestalt (or totality) of the product or service. Marketers in these areas focus on measuring consumers’ affective responses to products or services and develop offerings that elicit appropriate subjective reactions.

Difficulty: (H) Fact and Application Page: 292-293

78. Compare limited versus extended problem solving.

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Answer: The following situations are among those that characterize limited problem solving:low risk and involvement, little search, information processed passively, an in-store decision likely, weakly-held beliefs, only most prominent criteria used, alternatives are perceived as basically similar, noncompensatory strategy used, limited shopping time, and choice is influenced by in-store displays.

The following situations characterize extended problem solving: high risk and involvement, extensive search, information processed actively, multiple sources consulted prior to store visits, strongly-held beliefs, many criteria used, significant differences perceived among alternatives, compensatory strategy used, many outlets shopped if needed, and communication with store personnel is often desirable.

Difficulty: (M) Fact and Application Page: 296, Table 9.1

79. Define problem recognition. Show how problems can arise. Give a brief example to illustrate the problem recognition process.

Answer:Problem recognition occurs whenever the consumer sees a significant difference between his or her current state of affairs and some desired or ideal state. Notice that Figure 9.3 matches the example used in the text about a person running out of gas. Problem recognition can occur in two ways: (a) there is a downward movement of the actual state (a person runs out of gas) and (b) there is an upward movement in the ideal state (such as a person craving something that they do not currently have).

Difficulty: (M) Fact and Application Page: 296-297, Figure 9.3

80. Describe the various forms of bias that might be present in the information search portion of the decision-making process. Be sure to specifically identify and examine these biases.

Answer:Biases begin because of the way consumers view situations and information about those situations or the way a problem is posed (called framing).(a) The sunk-cost fallacy--having paid for something make us reluctant to waste it (even if this decision costs us something).(b) Loss aversion--people place much more emphasis on loss than they do on gain. Prospect theory finds that utility is a function of gains and losses; risk differs when the consumer faces options involving gains versus those involving losses.(c) Mental accounting--demonstrates that extraneous characteristics of the choice can influence our selections, even though they wouldn’t if we were totally rational decision makers.

Difficulty: (H) Fact Page: 300

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81. Purchase decisions that involve extensive search also entail some kind of perceived risk (a belief that the purchase potentially could have negative consequences). Name five perceived risks, indicate the kinds of consumers most vulnerable to each risk, and indicate the types of purchases most sensitive to each.

Answer:The five basic kinds of risk include both objective (e.g., physical danger) and subjective factors (e.g., social embarrassment). Consumers with greater "risk capital" are less affected by perceived risks associated with the purchases. The five basic kinds of risk include:

Monetary risk - Risk capital consists of money and property. Those with relatively little income and wealth are most vulnerable. Purchases most sensitive to

it: high-ticket items that require a substantial expenditure, such as cars, houses.Functional risk - Risk capital consists of alternate means of performing the function or

meeting the need. Practical consumers are the most sensitive. Purchases most sensitive to it: products or services whose purchase and use requires the

buyer's exclusive commitment and precludes redundancy.Physical risk - Risk capital consists of physical vigor, health, and vitality. Those who

are elderly, frail, or in ill health are most vulnerable. Purchases sensitive to it: mechanical or electrical goods (such as vehicles, flammables), drugs and medical treatment, food and beverages.Social risk - Risk capital consists of self-esteem and confidence. Those who are

insecure and uncertain are most sensitive. Purchases sensitive to it: socially visible or symbolic goods such as clothes, jewelry, cars, homes, or sports equipment.

Psychological risk - Risk capital consists of affiliations and status. Those lacking respect or attractiveness to peers are most sensitive. Purchases sensitive to it:

expensive personal luxuries that may engender guilt, durables, and services whose use demands self-discipline or sacrifice.

Difficulty: (H) Fact and Application Page: 304, Figure 9.6

82. What is an evoked set? Create an example to illustrate the term.

Answer:The evoked set consists of all those product alternatives actively considered by the consumer during his/her choice process. It is composed of products already in memory (the retrieval set) as well as those prominently displayed in the retail environment.

Students may create their own examples; however, these examples should be consistent with the material on page 305 in the test.

Difficulty: (E) Fact and Application Page: 305

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83. What is a cybermediary? List and briefly describe three different forms the cybermediary can take. Be specific in your description of the three forms.

Answer:A cybermediary is an intermediary that helps to filter and organize online market information so that customers can identify and evaluate alternatives more efficiently.

Forms (according to the chapter) include:(a) Directories and portals--general services that tie together a large variety of different sites.(b) Web site evaluators--reduce the risk to consumers by reviewing sites and recommending the best ones.(c) Forums, fan clubs, and user groups--offer product-related discussions to help customers sift through options.(d) Financial intermediaries--authorize payments from buyer to seller.(e) Intelligent agents--sophisticated software programs that use collaborative filtering technologies to learn from past user behavior in order to recommend new purchases.

Difficulty: (H) Fact and Application Page: 310

84. What is a decision-making heuristic? Describe two typical heuristics used in consumer decision-making situations.

Answer:Heuristics are mental short-cut "rules of thumb" consumers use to save time and effort in the decision-making process. Heuristics may be based upon previous experience, reports from others, or beliefs. They may range from the very general (e.g., "Higher-priced products are higher-quality products.") to the very specific (e.g., "Buy Domino, that's the brand of sugar my mother always bought.").

Typical heuristics include:

Price/quality relationship - That price is positively correlated with quality is one of the most pervasive market beliefs; for the most part, it is justified. Novice consumers may in fact consider price as the only relevant product attribute.

Reliance on a product signal - Sometimes consumers tend to infer hidden dimensions of products from observable attributes. A common example is the clean and shiny exterior of a used car up for sale. Consumers lacking knowledge may use signals such as how long the company has been in business, how well known the brand name is, price, etc. -- judgments which may be faulty.

Common market beliefs - There are many consumer beliefs about relationships in the marketplace, not all of which are accurate: e.g., locally-owned stores give the best service, all brands are basically the same, etc.

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Brand names - When a consumer consistently purchases the same brand over time, s/he may do it out of true brand loyalty or simply from inertia because less effort is required. E.g., the heuristic might be "I always buy Sony products."

Country of origin - Consumers' reactions to imports are mixed: in general, people rate their own country's products more favorably than they do foreign products; products from industrialized countries are more highly rated than those from developing countries. Certain items associated with specific countries may benefit from these linkages, e.g., shoes made in Italy are prized.

Difficulty: (H) Fact and Application Page: 311-317, Table 9.3

85. Define noncompensatory rules used in purchase decision-making. Give illustrations of the types of rules that might fall under this category.

Answer:When consumers consider attributes of several product choices, they may follow a simple noncompensatory decision rule, meaning that they feel a product with a high standing on one attribute cannot "make up for" (or compensate for) poor performance on another.

Noncompensatory decision rules - These decision rules are characterized by exclusion: low standing on one attribute cannot be ignored because of good performance on other attributes. Strong attributes do not compensate for weak ones.

Kinds of rules include:

Lexicographic rule - The brand that is best on the most important attribute is selected. In the event of a tie, brands are evaluated on the next most important attribute.

Elimination-by-aspects rule - Brands are compared for the presence of the attribute considered most important. If the feature is not present, that alternative is rejected.

Conjunctive rule - Minimum cutoffs are established for each attribute the brands possess. The brand must meet all cutoffs to be considered.

Difficulty: (H) Fact and Application Page: 319-320

86. Define compensatory rules used in purchase decision-making. Give illustrations of types of rules that might fall under this category.

Answer:Compensatory decision rules - Products are compared overall: relatively lower performance on some attributes may be outweighed by relatively higher performance on other attributes. Strong performance can compensate for weaker elements.

Kinds of rules include:

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Simple additive rule - This operates when the consumer selects the alternative having the largest number of positive attributes.

Weighted additive rule - This operates when each attribute varies in relative importance to the consumer. Ratings on each attribute are intuitively multiplied by their importance weights.

Difficulty: (M) Fact and Application Page: 321

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