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Chapter 011

MGMC02H3 Chapter Notes - Chapter 011: Ebay, Free Free, Confirmation Bias

Management (MGM)
Course Code
Bill Mc Conkey

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Post Decision Process
Post Decision Dissonance is a feeling of anxiety over whether the correct decision was made.
To reduce dissonance, search for additional information – selective because you try to make
chosen alternative more attractive and reject less attractive.
Post Decision Regret is a feeling that one should have purchased another option (unfavorable
comparison of performance chosen to ones not) – you can regret even if you have no
information about unchosen alternatives. To reduce regret, learn from decision to improve future
decisions, break major decision into smaller decisions to reduce regret of overall decision.
Typical idea of direct control of company by marketing communications – however, low
credibility, consumers assume messages are intended to persuade them to buy offering and is
skeptical about marketing claims. Experiencing event is more involving and interesting than
being told about it (consumer has more control over what happens). Investing various
alternatives is a learning experience. Experience is more vivid and therefore easier to remember
than other types of information. It also is more likely to generate a strong attitude (IE: ad stating
taste good vs. experiencing it).
Hypothesis Testing is testing expectations through experience – important because it makes
consumers more likely to gather evidence needed to learn.
4 steps in testing hypotheses:
1. Hypothesis Generation is forming expectations about a product or service (can happen
at any aspect of consumer behavior – acquisition, consumption, or disposition)
a. IE: New ad for movie, seen some of previous movies, generate hypothesis about
quality of movie as great
2. Exposure to Evidence is actually experiencing the product or service
a. IE: Going to see movie and confirm or disprove hypothesis
3. Encoding of Evidence is processing the information from experiences
a. IE: While watching, access whether or not great
4. Integration of Evidence and Prior Beliefs is combining new information with stored
a. IE: After watching movie – if like, confirm hypothesis learn to count on these
movies to be great; if not like, new belief that not all of these movies are great,
careful in future
Companies can use consumer feedback to learn about likes and adjust their options.
Consumer’s hypothesis of brand personality also influences learning – if firm has “sincere”
brand and suffers crisis, more difficult to reconnect with consumers because brand deteriorated,
if firm has “exciting” brand and suffers crisis, easier to reconnect with consumers because they
are less surprised.

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↑ motivation = ↑ # of hypotheses
↓ motivation = ↓ or no hypothesis, ↓ learn (unless process is simple – classical or
operant conditioning)
Prior Knowledge or Ability
↑ knowledge = have well defined beliefs and expectations, ↓ hypotheses, ↓ learn
↓ knowledge = lack skills to develop hypotheses to guide learning, ↓ hypotheses, ↓ learn
Moderate knowledge = ↑ hypotheses, ↑ learn
Ambiguity of Information Environment or Lack of Opportunity
↑ ambiguity (similar in quality, learn little from experience) = support hypotheses with
advertising or word of mouth, ↓ learn
↓ ambiguity = support hypotheses with actual experience, ↑ learn (better for memory and
Marketing Implications
Top dog = market leader with largest market share
oBenefit from ↓ learn because if high, might acquire information that disprove and
lead to switch
oTo avoid, state specific claims that justify consumers’ evaluation of brand
oNot encourage consumers for new information (blocking exposure to new
oHave unambiguous evidence, reinforce messages to tell why brand is satisfying
(explaining the experience, encouragement to try it  McDonald)
Underdog = lower share brands
oWant ↑ learn to encourage consumers to switch
oIf ↓ motivation, can instigate learning through side by side comparisons of brands
oNeeds distinct advantage to overcome confirmation biases
oHave promotions to provide actual experience
Processing Biases
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