Ing. Jana Turčínková Mendel University in Brno

1. Ing. Jana TurčínkováMendel University in Brno How consumers acquire, remember, and use product knowledge

2. Overview • Consumer attention and comprehension • Consumer memory • Consumer judgment • Consumer choice

3. Consumer attention and comprehension • Product knowledge acquired through secondhand experience, i.e. hearsay – provided by mass media, sales representatives, telemarketers, product labels, coupons, brochures, P-O-P displays, websites, etc. • Product knowledge acquired through firsthand experience, i.e. product trial – often more informative than indirect, secondhand experience

4. Limits of attention • Due to limited capacity, we must process information selectively. • Four stages in the human information receiving process: • stimulation, • registration, • organization, • interpretation. • Our senses are utilized to perceive the world around us and to help us learn about it. • Since stimulation comes at us from several directions at once, we have the biological capability to physically ‘tune out’ most of what we do not need for the task at hand.

5. The Magical No. 7, Plus or Minus Two • According to psychologist George Miller (1956), people can attend to seven (plus or minus two) units, or pieces, of information at one time. (We extend our capacity for information processing by creating categories into which stimuli are organized.) • Thus, it is easy to overwhelm or overload customers with too much information. • Because consumers cannot attend to and think about large amount of information at one time, presenting information in a way that reduces the time and effort involved in making comparisons helps consumers to make better decisions.

6. Attention intensity = The amount of information people can attend to, can vary from five to nine • Factors influencing the amount: prior knowledge or expertise • Arousal – a state of wakefulness or alertness • the best level for perception (when cognitive capacity is the greatest) → moderate arousal

7. Selective attention • Voluntary and Involuntary Attention • People voluntarily attend to information that is relevant to their current plans, intentions, and goals. • Salient stimuli draw attention involuntarily, it is difficult to ignore them.

8. Salience • Salience is context dependent – stimuli that are salient in one context or situation may not be very salient in a different environment. • Stimuli are salient only when they are different from other stimuli, e.g. novelties.

9. Vividness • Vivid stimuli also draws attention automatically and involuntarily. • However, they are attention drawing across contexts. • Vivid stimuli are • emotionally interesting, • concrete and imaginary provoking, and • proximate in a sensory, temporal, or spatial way.

10. Further factors • Personal interest • Concreteness – concrete information is easy to picture, imagine, and think about, and consequently, is often very influential. • Proximity – information that is close to a consumer is more vivid and has more impact then information that is distant or not immediately relevant • Sensory proximity, i.e. firsthand vs. secondhand information. • Temporal proximity, i.e. how recently an event occurred. • Spatial proximity, i.e. location of events.

11. Comprehension = relating information presented to information based on prior experience and stored in a memory • Believability (believing is easier then unbelieving – rejection a false claim requires an additional step and extra effort) • Distraction • Repetition

12. Selective perception • From a purely biological standpoint, our senses are utilized to perceive the world around us and to help us learn about it. • We take in stimuli from this world by tasting, touching, smelling, hearing and seeing what’s going on around us. • Selective perception from a psychological standpoint is how we view our world to create or justify our own reality – what we wish to see in this world we will see in this world. • Information we receive will be processed in a manner that harmonizes with and supports our current beliefs. In other words, as Nietzsche put, there really are no facts, only interpretations.

13. Selective perception

14. Selective perception • There are some differences in perception • cultural • personal • gender-specific • Also prejudice can affect perception

15. Consumer memory • People can store a large number of inactive memory traces in long-term memory. • However, to work with information, or to think, relevant information must be retrieved from inactive long-term memory (LTM) and brought into active short-term memory (STM). • We are consciously aware of information held in STM. • Although STM has a limited capacity, many different types of cognitive operations, or thought processes (such as thinking, reasoning, problem solving, decision-making, etc.), can be performed on information held in STM.

16. Consumer memory • The transfer of information from STM to LTM is controlled by: • rehearsal – involves repeating information over and over in one’s head, • coding – involves relating information stored in STM to information stored in LTM.

17. Short-term memory • It holds information only for a very brief period of time. • It can hold on average 7 plus or minus 2 items. • Primacy effect vs. Recency effect

18. Long-term memory • Has a very large storage capacity. • Once information is encoded or transferred into long term memory, it remains there permanently. • Organization – the process of grouping or chunking individual pieces of information into larger units on the basis of a specific relationship between the pieces – thus, if you want your consumers to remember information presented in an advertisement, information must be presented in an organized manner.

19. Long-term memory The encoding-specificity principle of LTM • LTM is context dependent – contextual cue or background cues have a surprisingly powerful influence on memory performance. • When people encode or learn information they wish to remember, irrelevant background information tends to be encoded along with the relevant information. • According to the encoding-specificity principle of LTM, memory performance is better when the contextual cues present during encoding and during retrieval are the same.

20. Long-term memory Association principle of LTM • Each concept, idea or piece of information stored in memory is represented as a node and each node or idea is connected to other nodes by links referred as associations. • Together, all the nodes and all the associations form a complex associative network, in which all pieces of general knowledge are interrelated with other pieces. • Ideas that are closely related are connected directly by a single association. • Ideas that are less closely related are connected by a series of associations between many related concepts.

21. Long-term memory The priming effect • Retrieving product information from memory begins with the activation of a node. • Activation refers to the transfer of information from inactive LTM to active STM. • However, once one node is activated, other closely related nodes are activated also – activation spreads. • Currently active concepts prime or facilitate the activation of closely related concepts. • Once a concept has been activated, it influences how we think about other topics.

22. Long-term memory activation The priming effect • Judgment often involves comparing a target stimulus with some comparison stimulus, and different comparison stimuli are primed or activated in different situations. • When the target and the primed concept are similar, perceived similarities are exaggerated if the target is ambiguous. • When the target is unambiguous or when the primed concept is extreme or unusual, perceived differences are exaggerated.

23. Long-term memory activation Associative interference • The rate at which activation spreads across a particular node increases as number of related concepts linked to that node increases. • It takes time to find (activate) a particular node in a rich, elaborate, associative network. • The bigger the associative network, the longer it takes to find a particular node. • Rumors?

24. Implicit memory • When people consciously try to retrieve information from LTM to perform an explicit memory task – such as a recognition, cued recall, or free recall task – memory serves as an object of attention. People are aware that they are focusing on and consulting memory. • However, memory is also often used as a tool for making judgments and decisions. When we use memory as a tool to perform implicit memory task, we are not aware that we are using memory, and we do not realize that we are being influenced by prior experiences and memories.

25. Consumer judgment • A judgment refers to the location of a target object or issue on a cognitive continuum. • Some cognitive continua are nonevaluative, such as the concepts “safe”, “gentle”, or “effective”, and are referred to as beliefs. • Consumers hold many beliefs. • Beliefs are important because they often serve as building blocks for more complex judgments, such as attitudes (evaluative judgments) and preferences (evaluative judgments involving more than one product).

26. Nonevaluative judgment (belief) • The type of consumer beliefs marketers are interested in are beliefs about product attributes and benefits (consequences of attributes). • All products have attributes, or features, that are of concern to consumers. • Beliefs can be measured on a scale. The scales are continuous. • Types of beliefs: • informational beliefs – based on indirect, secondhand experience, • descriptive beliefs – based on direct, firsthand experience with a product, often stronger than informational, • inferential beliefs – beliefs that go beyond information given or the information that is available from firsthand or secondhand sources. Inferences about missing information can be made on basis of correlated presented information, e.g. when price of a product is known and quality is unknown, consumers often use price to infer quality.

27. Evaluative judgment (attitude) • Evaluative judgment has two main components: direction (e.g. god or bad, positive or negative) and extremity (e.g. slightly good, fairly good, very good, extremely good) • An evaluation is always made with respect to some target object or issue. • The object can be general or specific, physical object or an abstract issue. • People can form attitudes toward any object or issue. • Attitudes can be based on many different types of information.

28. Preference judgment • Preferences are evaluative judgments concerning two or more objects. • Preferences always involve making comparisons between objects. • Sometimes attitudes serve as building blocks for preferences, and sometimes preferences are based on comparisons of attributes or features of two or more products. • Attitude-based preferences – preferences formed on basis of consumers’ overall attitudes toward two or more products. • Attribute-based preferences – preferences formed on the basis of comparing one ore more attributes of two or more brands are know.

29. How are preference determined • To form attitude-based preferences consumers must have previously formed attitudes toward each relevant alternative stored in long-term memory. • If attitudes are unavailable, preferences cannot be based on attitudes. • If we form preferences based on product attributes: • Unique attributes – such attributes that are included in the description of one product, but omitted from the description of the other product. • Shared attributes are those that are common to both products. • Shared attributes have litter influence on preference judgments, it’s the unique attributes that have greater impact.

30. Satisfaction judgment • Satisfaction involves comparing a chosen product with a rejected product. The chosen product is the product the consumer actually purchased. The rejected product is a product that was considered for purchase but was not chosen. • If the chosen product seems superior to the rejected one, the consumer will be satisfied. • However, if the chosen product seems inferior to the rejected alternative, the consumer will experience dissatisfaction or regret. • Satisfaction is important, because it influences repeat purchase.

31. Prediction and intention judgment • Predictions about future events influence many other types of judgments, including expectancies, attributions, and intentions. • Good consumer decision making requires accurate probability or likelihood judgments about a wide variety of events, such as accurate predictions about future product performance, prediction about when a product requires replacement, about behaviors of others, about one’s own future behaviors, etc. • However, people are not very good at this type of judgment task. The often form impossible judgments.

32. Prediction and intention judgment • Reasons, why prediction is so difficult, are that people use heuristics – cognitive shortcuts, used to generate predictions, used with little mental effort and awareness. • Representativeness heuristic – judgment based on similarities, i.e. if a new product reminds us of an old brand we really liked, we tend to predict that the new product will perform well, too. • Availability heuristic – forming predictions based on the ease with which instances can be retrieved from memory. • Anchoring and adjustment heuristic – involves forming an initial judgment or first impression (an anchor) and then shifting (adjusting) this judgment upward or downward depending on the implications of imagined possibilities.

33. Judgments and behavior • Many studies show that the relationship between attitudes and behaviors is often only weak though. • Why attitudes fail to predict behavior: • behavior is multiply determined (not only by attitudes), • individuals are very different from each other, • strong attitudes influence behavior but weak attitudes do not. • Norms – rules that dictate what actions are appropriate or inappropriate. • Social norms are unwritten rules adopted by a group of people. • Personal norms are adopted codes of conduct by specific individuals rather than by social groups. • Sometimes attitudes and norms conflict, then norms usually win. • Social and personal norm can be viewed as constraints, or rules that prevent us from doing certain things in particular situations.

34. Judgments and behavior • Individual differences and personality processes also influence the extent to which attitudes guide behavior. • Properties of attitudes influence the degree to which attitudes guide behavior – strong attitudes guide behavior, weak attitudes don’t.

35. The theory of reasoned action The person’s (1) beliefs that the behavior leads to certain outcomes and (2) evaluations of these outcomes. Attitude toward the behavior Intention Behavior The person’s beliefs that specific individuals or groups think he or she should or should not perform the behavior and his or her motivation to comply with specific references. Subjective norm The theory suggests that attitudes influence behavior through on effortful process.

36. Consumer choice • Consumer choice involves selecting one product from a set of possibilities. • Unlike judgment, which is continuous, choice is discrete – consumers either buy the product or they don’t. • Sometimes, choice is based on judgment, at other times, choice is attribute based. • Understanding consumer choice involves understanding three key issues: • what products or brands are considered for purchase, • what information is used to detect differences among considered alternatives, and • how this information is used.

37. The consideration set • A consideration set is the group of products a consumer considers in making a purchase decision. • Typically ranges from one to about nine (because of limited information processing capacity). • Because consumers consider so few products, marketing managers have to be creative to get consumers to consider their brands rather than competitors’ offerings. • Heavy promotion for one brand can increase memorability of the brand and decreases memory for other brands.

38. Stimulus-based vs. memory-based choice • After the consideration set has been determined, consumers need to focus on differences between considered alternatives. • Some brands have features or options other brands lack, and these options help consumers detect differences between brands. • Focusing on differences is so important that consumers are willing to use any attribute, even trivial ones, to discriminate between brands that are otherwise quite similar. • Typically, however, consumers focus on important differences, unimportant differences are considered only when important ones do not exist.

39. Stimulus-based vs. memory-based choice • Stimulus-based choice – takes place when all relevant brand and attribute information is directly observable. It is relatively easy to detect differences between alternatives, because direct comparison is possible. • Memory-based choice – takes place when none of the information the consumer needs is directly available and comparisons between alternatives must be performed by retrieving relevant information from memory. • Mixed choice – the most common type of choice scenario, it has elements of both above mentioned choices.

40. Attitude-based vs. attribute-based choice • Attitude-based choice – when consumers choose a product to purchase and their decision strategy is based on their previously formed attitudes toward the considered alternatives. • Attribute-based choice – when consumers base their choice on a comparison of specific attributes or features offered by the considered alternatives.

41. Choice heuristics • Sometimes consumers are unwilling or unable to use complex and effortful decision strategies and prefer to make quick and easy decisions that do not require a lot of thought or effort. • To solve this, consumers use choice heuristics. • Heuristics enable them to make decisions quickly and easily. Of course, when one uses minimal information, he risks overlooking something important and making a bad decision. • There is a number of often used heuristics, such as: compensatory and noncompensatory strategies, attitude heuristic, frequency of good and bad features heuristic, lexicographic heuristic, lexicographic semiorder heuristic, elimination-by-aspects heuristic, additive-difference heuristic, majority of confirming dimensions heuristic, conjunctive heuristic, phased strategies, etc.

42. Determinants of choice strategy • Processing goals – they are influenced by variables such as involvement (personal relevance or importance of a decision) and accountability (a requirement to justify or explain one’s decision to others). Both goals increase one’s motivation to make good decisions, even if a lot of time and effort is required. • Processing load – refers to the amount of limited cognitive capacity needed form information processing. Processing load increases as decision difficulty increases. • Contextual variables – information about product can be presented in many different ways, and the manner in which information is presented influences how this information is processed. Names, frames, and descriptions produce powerful effects on choice.