Business Administration 3301K Study Guide - Final Guide: Status Quo Bias, Loss Aversion

• School: Western University
• Department: Business Administration
• Course: Business Administration 3301K
• Professor: John White

Document Summary

Eager sellers and stony buyers marketing psychology. Half of first movers advantage companies fail to understand why new innovations do not entice consumers, we must understand behavior change. Need to understand this in order to improve chances of success. People want to avoid conversion and activation fees. Psychological costs are associated with behavior changes. People have a biased towards things they currently own. Value advantages of products they own more than benefits of new innovations executives overvalue their innovation and must predict buying behaviours of consumers who overvalue existing alternatives consumers therefore reject new products that would make them better off. Psychological gains and losses: companies assume that consumers want new products that are better than existing products. People evaluate the attractiveness of a business based subjective or perceived value consumers evaluate new products or investments relative to a reference point (things they already own: everyone has their own personal reference point.