Todays Lecture

1
Todays Lecture

• What is an attitude?
• Measuring Attitudes
• Affect-Cognition Consistency Theories
• Attribution, Scripts, and Hindsight
• Decision making

2
The Attitude Construct

• Persons overall evaluation of object, concept or
  act
• Various attitude concepts
• Ao
• Aact
• Aad
• Levels of specificity
• Product class
• Brand equity
• Brand in particular situation

3
Measuring Attitudes

• Explicit Measures
• Scale Items
• Verbal Protocols
• Implicit Measures
• Sentence/word completion
• Word association
• Perceptual identification

4
Attitude Formation

• Affective learning of attitudes
• Direct, not necessarily via beliefs
• Automatic, non-conscious
• Cognitive learning of attitudes
• Piecemeal processing
• Category-based processing
• Once formed, attitude may be stored in long term
  memory
• Direct retrieval of attitudes
• Makes construction of attitudes unnecessary

5
Theories of Attitude Formation

• Affect transfer
• Repeated pairing in memory can lead to affect
  transfer
• Michelin babies
• Consistency Theories -- People strive for
  coherence and meaning in their affective and
  cognitive structures.
• Balance Theory
• Cognitive Dissonance

6
Balance Theory

• Triads of relations, which the holder wants to
  have in balance
• Out of balance example
• Me, My Wife, Christmas
• I dont like Christmas, I like My Wife, My Wife
  likes Christmas
• I am motivated to make a change to keep balance.

My Wife


Christmas
Me
-
7
Applications of Balance Theory

• Expert/Celebrity Endorsements

Michael Jordan

Me ? Gatorade
8
Cognitive Dissonance

• Focuses on situation when cognitive elements are
  inconsistent with one another
• Essay writing paradigm
• This inconsistency creates a feeling of
  discomfort which the person is motivated to
  reduce.
• Dissonance can be reduced by eliminating,
  changing, or adding elements.

9
Cognitive Dissonance in Marketing

• Excessive payment can foster loyalty
• However, payment can cause Buyers Remorse
  (particularly for expensive branded purchases,
  such as cars)
• Post-purchase dissonance reduction
• Attitude change after large purchase
• Strategic response to aid dissonance reduction?
• Send congratulatory mailings
• Include promotional materials in the package

10
Consumer Psychology Exam

• 6 short answer/essay questions, 10 points each
• Sample Question
• 2. As a brand manager for Porsche, one of your
  most important responsibilities is preventing
  Buyers Remorse (an effect that often occurs
  when consumers spend a great deal of money on a
  luxury good). What theory relates to the impact
  of buyers remorse on consumer attitude?
  (explain) Knowing what you know about this
  theory, what might you do to alleviate the
  negative effects of Buyers Remorse for recent
  Porsche purchasers?

11
Consumer Psychology Exam Grading

• 10 points A great answer that demonstrates
  excellent understanding of the theory in question
  and applies the theory extremely well.
• 9 points A solid answer that demonstrates
  general understanding and that applies the
  theory appropriately (e.g. an answer that is
  technically correct, but which misses some
  subtle aspects of the theory or that slightly
  misapplies the theory).
• 8 points A good attempt at answering the
  question, but one which misses a major part of
  the theory or misapplies a major element of the
  theory.
• 7 points An answer that includes some correct
  elements, but that almost completely misses the
  boat.
• 6 points Absolutely no understanding of the
  theory or application. (Ill give 6.5 if you can
  make me laugh)

12
Class Reminder

• Make sure to hit the website after today to
  download Inquisit software
• We will be using it in class next time
• www.andrewperkins.com

13
Behavior

• Theories that describe behavior
• Script-based
• Hindsight Bias

14
Script-Based Behaviors

• Scripts
• Procedural knowledge
• Directs behavior
• Can be activated automatically
• Can you think of any scripted behaviors?

15
Hindsight Bias

• Confirmatory information collected,
  disconfirmatory information ignored
• Conterfactual Reasoning
• How might have things been different?
• People choose unusual events as causes
• Product Failure overestimated?

16
OK, on to decision making

• Expected Utility Theory vs Prospect Theory
• Rational vs. Irrational
• Pricing Applications
• Price as an indicator of quality
• Evaluation Heuristics

17
Expected Utility Theory

• Normative theory of behavior
• A rational decision maker should
• Not be influenced by order of alternatives
• Never choose a dominated alternative
• Ignore common factors shared by alternatives
• Not violate transitivity (If A gt B B gt C, then
  A gt C)
• Properly use probability in assessing value
• Should not be influenced by framing

18
Prospect Theory

• Explains many violations of EU Theory by
  ascribing value to outcomes that is not linear
  product of gains and losses

• Value

• Gains

• Losses

19
Tenets of Prospect Theory

• Loss Aversion
• People feel more negative about losses than they
  feel positive about a gain
• Moderated by self association with object
  (automatic?)
• Endowment Effect
• Value of an object increases once it is
  attributed to you
• Thus, people say that an object that belongs to
  them are worth more than equivalent objects that
  do not belong to them AND more than an equivalent
  amount of cash.

20
Applying Prospect Theory Decision Framing

• Lives Saved vs. Lives Lost (Tversky Kahneman,
  1981)
• Imagine that the U.S. is preparing for the
  outbreak of an unusual Asian disease, which is
  expected to kill 600 people. Two alternative
  programs to combat the disease have been
  proposed. Assume that the exact scientific
  estimate of the consequences of the program are
  as follows . . . Which of the two programs would
  you favor?

If program A is adopted, 200 people will be
saved. If program B is adopted there is 1/3
probability that 600 people will be saved, and
2/3 probability that no people will be saved.
21
Group 2

• Lives Saved vs. Lives Lost (Tversky Kahneman,
  1981)
• Imagine that the U.S. is preparing for the
  outbreak of an unusual Asian disease, which is
  expected to kill 600 people. Two alternative
  programs to combat the disease have been
  proposed. Assume that the exact scientific
  estimate of the consequences of the program are
  as follows Which of the two programs would you
  favor?

If program C is adopted 400 people will die. If
program D is adopted there is 1/3 probability
that nobody will die, and 2/3 probability that
600 people will die.
22
Applying Prospect Theory Decision Framing

• Lives Saved vs. Lives Lost (Tversky Kahneman,
  1981)
• Imagine that the U.S. is preparing for the
  outbreak of an unusual Asian disease, which is
  expected to kill 600 people. Two alternative
  programs to combat the disease have been
  proposed. Assume that the exact scientific
  estimate of the consequences of the program are
  as follows . . . Which of the two programs would
  you favor?

If program A is adopted, 200 people will be
saved. (72) If program B is adopted there is 1/3
probability that 600 people will be saved, and
2/3 probability that no people will be saved.
(28)
If program C is adopted 400 people will die.
(22) If program D is adopted there is 1/3
probability that nobody will die, and 2/3
probability that 600 people will die. (78)
23
Applying Prospect Theory Pricing

• Reference Prices
• Price-quality inferences
• Purchasing wine
• Eating Truffles?

24
Reference Pricing

25
Price-Quality Inferences

26
Price-Quality Inferences

27
Heuristics and Biases

• 1) Linda is 31 years old, single, outspoken, and
  very bright. She majored in philosophy. As a
  student, she was deeply concerned with issues of
  discrimination and social justice, and also
  participated in anti-nuclear demonstrations.
  Please choose the most likely alternative
• A. Linda is a bank teller
• B. Linda is a bank teller and is active in
  the feminist movement

28
Decision Making Demonstration

• 2) Which kills more people each year?
• A. Falling airplane parts
• B. Shark attacks
• 3) Which group has the highest divorce rate?
• A. Politicians
• B. Academics
• C. Actors
• 4) Which is more common?
• A. Homicide
• B. Suicide

29
Decision Making Demonstration Poultry Paradise

• Are there more or less than 50 Billion Chickens
  in the United States?
• Are there more or less than 5 Thousand Chickens
  in the United States?
• How many Chickens are there in the United States?

30
Evaluation Heuristics

• Conjunctive fallacy
• Availability and Scarcity
• Anchoring and Insufficient Adjustment

31
Scarcity Theory
32
Scarcity Theory

33
Scarcity Theory

34
Merchants of Cool

• Transition to Brand Management
• While watching, notice
• Self-concept issues
• Brand/self-concept interface
• How are attitudes formed
• How individuals behave in groups
• How corporations leverage psychological
  principles that we have discussed