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Elements of a gamble
- Gambles have two components:
- 1. Probability
- 2. Value
- The expected value of a gamble (EV)= PxV
Expected Utility Theory
- Dominance Principle
Alternative gambles can be ranked from best to worst in terms of expected value.
Stages of gambles should cancel out if they are identical for two gambles.
Preferences should be transitive, i.e., if you prefer A to B and B to C, then you must prefer A to C.
Preference should remain invariant or stable, no matter how choices are described.
- All outcomes are evaluated with respect to a neutral reference point, and preferences change as reference points change.
- EX: Money to poor vs. Money to rich
Losses have a bigger impact on people than do equivalent gains.
as the amount of time or money invested in a project increases, people are more reluctant to give up the project.
Judging or evaluating brands and products one at a time.
Judging or evaluating two or more products concurrently.
the tendency to view an item as more valuable if one owns it.
the numerous positions that consumers occupy in society.
- Role Identities
- Personal Qualities
derive emotional status by helping consumers resolve internal conflicts.
- the extent to which consumers use situational cues to guide their social behavior.
- High self-monitors
- Low self-monitors
the process of creating desirable images of ourselves for others.
- a set of unique psychological characteristics that influence how a consumer responds to his or her environment.
- Cognitive tendencies
- Affective tendencies
- Behavioral tendencies
Five Factor Model
- Five, basic human personality traits.
- 1. Surgency (outgoingness)
- 2. Agreeableness
- 3. Conscientiousness
- 4. Emotional Stability
- 5. Intellect
- There are Cognitive Personality Variables and there are Cognitive Traits, and one of them includes a need for cognitive closure.
- A need for a situation to come full circle and make sense.
giving non-humans human-like traits
giving non-humans both human form and human-like traits.
the word "because" may be enough to trigger compliance.
- A small request is followed with a larger request.
- Consumers who initially comply with the small request are more likely to also comply with the second.
- Agreeing with the initial request imparts a resistance to change.
- Salespeople obtain a verbal commitment from consumers, and then change the deal.
- Consumers often accept the new and less attractive deal because they don't like to change their minds.
- The low-ball technique is a classic strategy of car salespersons.
- When someone does you a favor, you feel obligated to return it in kind.
- Reciprocity is a form of social etiquette.
- Consumers often return larger favors than they receive.
- Following-up a large, unreasonable request with a smaller, more sensible request.
- The smaller request is viewed as a concession, often engendering reciprocity.
- Consumers often want what they can't have.
- Consumers also want things that may not be available in the future.
Social Validation Principle
- The perceived validity (or correctness) if an idea increases as the number of people supporting the idea increases.
- "The proof is in the numbers."
- Consumers tend to comply with those whom they like.
- Physical attractiveness
The patterns of meaning acquired by members of society expressed in their knowledge, beliefs, art, laws, morals, customs, and habits.
Cultural framework for consumer behavior
- Station1: Culturally Constituted World
- Marketing Activities and Fashion System
- Station 2: Consumer Products
- Exchange, Possession, Grooming, and Divestment Rituals
- Station 3: Individual Consumers
- Linguistic Differences
- Cultural Translation Difficulties
- High and Low Context Cultures
- Symbolic actions that occur in a fixed sequence and are repeated over time.
- Exchange Rituals
- Possession Rituals
- Divestment Rituals
- learning about one's own culture
- Cultural agents transfer meaning at all three stations
- Marketing and fashion agents, opinion leaders, peers, parents, and teachers.
learning and adapting to meaning in another culture.
- Power Distance
- Uncertainty Avoidance
- Long-Term Orientation
explicitly and formally prescribed acceptable behaviors.
the degree to which society is partitioned into groups.
the extent to which men are expected to be different from women.
the extent to which a culture is uncomfortable with ambiguity.
A culture's search for virtue.
The inane human desire to continue moving upwards on the social ladder.
- The overall standing a consumer occupies in society based on characteristics valued by others. Consumers within a social class tend to share common:
- Family backgrounds
- Ownership of property
- Can be thought of as "community esteem." People in the same social class tend to:
- Share lifestyles and preferences
- Socialize with one another
- Share purchase behaviors
- A four-step process that occurs as nations develop from pre-industrial to highly developed economies:
- Stage 1: Transitional onset of industrialization, along with lower death rates and a growing population.
- Stage 2: Transitional onset of industrialization, along with lower death rates and a growing population.
- Stage 3: Industrial declining birthrates due to increasing affluence and urbanization. Population approaches zero percent.
- Stage 4: Post-Industrial falling birth rates, while death rates remain low the population eventually decreases.
- The Pre-Depression Generation
- The Depression Generation
- The Baby Boomers
- Generation X
- Generation Y
- Generation Z
The Pre-Depression Generation
Born prior to 1930, the GI Generation came of age during the Depression (1930-1941) and went on to build modern America.
The Depression Generation
Also known as the Silent Generation, this age cohort was born between 1930 and 1945.
The Baby Boomers
Born immediately after WWII (1946-1964), more than 76 million boomers made up about 25 percent of the US population in 2010 and nearly one third of the adult population.
Gen X, also known as the Baby Busters, were born between 1965 and 1976.
Millennials, or Echo Boom, were born between 1977 and 1995.
Generation Z is commonly thought to include those born during the latter half of the 1990s through the late 2000s, specifically after 1995.