Page 200 - Marketing Management

ANALYZING CONSUMER MARKETS | CHAPTER 6 177

Consider the following two scenarios:
1. Assume you spend $50 to buy a ticket for a concert. 80 As you
arrive at the show, you realize you’ve lost your ticket.You decide
to buy a replacement.
2. Assume you decided to buy a ticket to a concert at the door. As
you arrive at the show, you realize somehow you lost $50 along
the way. You decide to buy the ticket anyway.
Which one would you be more likely to do? Most people choose
scenario 2. Although you lost the same amount in each case—$50—
in the first case, you may have mentally allocated $50 for going to a
concert. Buying another ticket would exceed your mental concert
budget. In the second case, the money you lost did not belong to any
account, so you had not yet exceeded your mental concert budget.
According to Chicago’s Thaler, mental accounting is based on a
set of core principles:
1. Consumers tend to segregate gains. When a seller has a product
with more than one positive dimension, it’s desirable to have Mental accounting principles help
the consumer evaluate each dimension separately. Listing multiple benefits of a large indus- predict whether consumers will or
trial product, for example, can make the sum of the parts seem greater than the whole. will not go to a concert after
2. Consumers tend to integrate losses. Marketers have a distinct advantage in selling something if having lost a ticket or some
its cost can be added to another large purchase. House buyers are more inclined to view money.
additional expenditures favorably given the high price of buying a house.
3. Consumers tend to integrate smaller losses with larger gains. The “cancellation” principle
might explain why withholding taxes from monthly paychecks is less aversive than large,
lump-sum tax payments—the smaller withholdings are more likely to be absorbed by the
larger pay amount.
4. Consumers tend to segregate small gains from large losses. The “silver lining” principle might
explain the popularity of rebates on big-ticket purchases such as cars.
The principles of mental accounting are derived in part from prospect theory. Prospect theory
maintains that consumers frame their decision alternatives in terms of gains and losses according
to a value function. Consumers are generally loss-averse. They tend to overweight very low proba-
bilities and underweight very high probabilities.

Summary

1. Consumer behavior is influenced by three factors: marketing campaigns might be targeted to each type
cultural (culture, subculture, and social class), social of person.
(reference groups, family, and social roles and 4. The typical buying process consists of the following se-
statuses), and personal (age, stage in the life cycle, quence of events: problem recognition, information
occupation, economic circumstances, lifestyle, search, evaluation of alternatives, purchase decision,
personality, and self-concept). Research into these and postpurchase behavior. The marketers’ job is to
factors can provide clues to reach and serve con- understand the behavior at each stage. The attitudes of
sumers more effectively. others, unanticipated situational factors, and perceived
2. Four main psychological processes that affect con- risk may all affect the decision to buy, as will con-
sumer behavior are motivation, perception, learning, sumers’ levels of postpurchase product satisfaction,
and memory. use and disposal, and the company’s actions.
3. To understand how consumers actually make buying 5. Consumers are constructive decision makers and sub-
decisions, marketers must identify who makes and ject to many contextual influences. They often exhibit
has input into the buying decision; people can be initia- low involvement in their decisions, using many heuris-
tors, influencers, deciders, buyers, or users. Different tics as a result.