Judgment and Decision Making

Based on Low Consumer Effort

Henk Roest

Hierarchy of Effects

Overview
Low-Effort Judgment Processes Low-Effort Decision-Making Processes
Low-Effort Thought-Based Decision Making Low-Effort Feeling-Based Decision Making

Low versus High Involvement

LowLow-Effort Judgment Processes

Shortcuts in Making Judgments
The Representativeness Heuristic The Availability Heuristic
Base-Rate Information Law of Small Numbers

Overview
Low-Effort Judgment Processes Low-Effort Decision-Making Processes
Low-Effort Thought-Based Decision Making Low-Effort Feeling-Based Decision Making

Low versus High Involvement

LowLow-Effort DecisionDecision-Making Processes

How Does Low-Effort Decision Making Differ from High-Effort Decision Making?
Hierarchy of Effects Passive or Incidental Learning

The Learning Process

Simplifying Strategies when Consumer Effort Is Low Satisfied Choice Tactics

LowLow-Effort Though-Based ThoughDecision Making

Choice Heuristics Performance-related tactics If choosing among familiar products... Choose the product that you think works best - that provides the best level of performance. Select the one you typically buy as long as it is satisfactory. If choosing among unfamiliar products... Choose the one others recommend.

Habit tactics

Choice Heuristics Normative tactics

Price-tactics

Buy the least expensive (or the most expensive, depending on your beliefs about relationship between price and quality). Choose something different. Live a little!

Variety seeking tactics

Brand Loyalty
Why important?
Reduced marketing costs (costs of attracting new customer = 6 x costs of retaining old customer) Higher prices (loyal consumers are less price sensitive) Trade leverage Time to respond to competitive moves

LowLow-Effort Feeling-Based FeelingDecision Making

Feelings as a Simplifying Strategy

Affect Affect Referral
Affect-Related Tactics Affect Referral

Brand Familiarity Visual Attributes

Co-Branding

LowLow-Effort Feeling-Based FeelingDecision Making

Decision Making Based on

Variety-Seeking Needs
Variety Seeking Optimal Stimulation Level (OSL) Sensation Seekers Use Innovativeness Vicarious Exploration Buying on impulse

LowLow-Effort Feelings-Based FeelingsDecision Making

Buying on Impulse
Intense Consequences Euphoria Conflict

Buying on Impulse Category Decision Types

Four levels of planning for a purchase in a category: Specifically planned (buy Pepsi) Generally planned (buy soft drinks) Switch (plan Pepsi, buy Coke) Unplanned

Decision Rates in Supermarkets

Switching 4% Generally Planned 6% Specifically Planned 30%

Unplanned 60%

Supermarket In-Store Decision Rate: 70% Source: POPAI Consumer Buying Habits Study/Meyers Research Center

Using a new POP technology to capture customers spare change

New technology developed by Walker Digital called Retail DNA Takes advantage of prior research on the spare change or denomination effect (Raghubir and Srivastava, 2004) Stimulate POP activity through consumers
Interest in a deal Lack of interest in getting coins, i.e. the spare change effect

Adopters of Retail DNA

Quick-service restaurants (QSRs) have found an increase of 3-5% in sales Take rate is about 35% with an average savings of 35-45% on items purchased Also tried with two state lotteries

Involvement
Cognitively-based Reflects the extent of personal relevance of the decision to the individual in terms of his basic values, goals and self-concept (Engel&Blackwell, 1982) Individual-state Interest level or motivational intensity (Ratchford&Vaughn, 1989) Response-based Time and/or intensity of effort expended in the undertaking of behaviors (Stone, 1984)

Definitions of Involvement
1)

Cognitively-based definitions

2)

Individual-state definitions

3)

Response-based definitions

Views on Involvement 1
Cognitive linkages Mental state Individual INVOLVEMENT Actualized response Level of abstraction
High

Low

Views on Involvement 2
Types of Involvement
Situational involvement
temporary interest

Enduring involvement
interest over an extended period of time

Conceptualizing Involvement

Antecedents of Involvement
5 antecedents: 1) Interest 2) Pleasure 3) Sign 4) Risk importance 5) Risk probability
(Kapferer & Laurent, 1985)

Gebeurtenissen in het leven van een klant

Hoge onzekerheid
Scheiden

Financile producten

Eerste koopwoning Parttime werken (vervroegde) pensionering Arbeidsongeschikt worden Partner overlijdt

Studeren Eerste baan

Eerste kind Ander huis Verzorgen ouders Eerste huurhuis Samenwonen/trouwen

Lage impact

Hoge impact
Overlijden ouders

Andere baan Tweede en volgende kind Eerste kleinkind Ander huurhuis Kinderen uit huis

Lage onzekerheid

Involvement
Conditions for consumer involvement
1. Product importance 2. Continuous interest 3. Emotional appeal 4. Badge value

Type of involvement

Enduring involvement

1. Perceived risk 2. Badge value

Situational involvement

Objects of Involvement
Involvement with Product Categories Involvement with Brands Involvement with Ads Involvement with a Medium Involvement with Decisions .. Therefore, specifying the Object of Involvement is important

Results of Involvement
Low involvement consumers
1. 2. 3.

High involvement consumers

1. 2. 3.

learn information at random are information gatherers are a passive audience for advertising ( strong effect!) buy first; evaluate afterwards seek acceptable level of satisfaction (familiarity!) are hardly influenced by reference groups (low badge
value)

are information processors are information seekers are an active audience for advertising ( weak effect!) evaluate brands before buying seek maximum level of satisfaction (brand comparisons!) are influenced by reference groups (high badge value)

4. 5.

4. 5.

6.

6.

Marketing Implications of Low Involvement Decision Making (1)

Advertising
Short-duration messages, few key points High repetition Visual and nonmessage components Symbols and imagery Television i.s.o. print media Sales Promotions

Marketing Implications of Low Involvement Decision Making (2)

Price
Price reductions, coupons, free samples

In-store stimuli
Coupons, displays, large shelf space

Distribution
Widespread distribution

Eigen merk deal effect curves voor verschillende typen ondersteuning

Verwacht aantal verkopen merk 1

Shifting Consumers from Low to High Involvement

1. Link product to involving issue 2. Link product to involving personal situation 3. Link product to involving advertising 4. Change importance of product benefits 5. Introduce important characteristic in product

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