Exam (elaborations)
Consumer Analysis- biases and heuristics in the decision making process
- Module
- Marketing
- Institution
- London School Of Marketing
Outline your understanding of both biases and heuristics in the decision making process
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Outline your understanding of both biases and heuristics in the decision making processThere are three different types of decision making processes. These processes, are cognitive,
habitual and affective. Understanding the factors that influence decision making process is
important to understanding how decisions are made.
Cognitive Decision-Making Process
Problem recognition happens if we observe major differences in our current circumstances
and the circumstances we would like.
Information search is method we use to observe the environment for internal and external
information to make a logical decision.
Evaluation of alternatives is where a consumer considers all of their product or brand
offerings by measuring the attributes and which would have the ability to deliver
the benefit that they are looking for. In order to maximize the probability that their brand will
be part of the evoked collection for other customers, a marketing company has to consider
what advantages customers are pursuing and, more importantly, what qualities will have the
most effect on their decision-making process.
Product choice is the stage in which the consumer makes their decision because they have
evaluated all the options and identified the value that it will offer them.
Biases
In decision making, biases affects people by making them focus more on or have more
confidence in expected results and prior knowledge, while ignoring information or findings
that are viewed as undetermined, without focusing on the grand scheme. Although this
impact can often contribute to bad decisions, biases helps individuals to make competent
decisions with the aid of heuristics (Shah & Oppenheimer, 2008).
Mental accounting applies to the various values a person places on money, based on
individual judgement, which often has negative effects. Mental accounting sometimes causes
individuals to make unreasonable investment choices and act in a financially detrimental or
negative way, such as opening a savings account for a vacation while having high credit card
debt.
Individuals commit the sunk cost fallacy because they are reluctant to waste something they
have invested time, money or some resources in . For example, people often stay in unhappy
relationships because they have invested in it. A lot of people get stuck in this psychological
trap because they try to reassure themselves that they've managed to regain the deficit. Many
people get caught in this psychological trap because they want to convince themselves that
they’ve managed to recover the loss.
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