Lesson 17-19.pdf

Lesson 17: Judgment and Decision-Making Based on High and Low Effort Judgment and Decision-Making Based on High Effort Judgment. It involves forming evaluations or estimates, not always objective of the likelihood of the occurrence of events. Decisions. It entails choo...

Lesson 17: Judgment and Decision-Making Based on High and Low Effort Judgment and Decision-Making Based on High Effort Judgment. It involves forming evaluations or estimates, not always objective of the likelihood of the occurrence of events. Decisions. It entails choosing from among options or courses of action. 2 MAJOR TYPES OF JUDGMENT Judgments of likelihood This is the determination of the probability that something will occur. Ex. Imagine a consumer is considering purchasing a new smartphone. Before making a decision, the consumer evaluates the likelihood of different scenarios related to the purchase Likelihood of Satisfaction The consumer judges the likelihood of being satisfied with the performance, features, and design of the smartphone based on reviews, recommendations, and past experiences with similar product experience. Likelihood of Durability The consumer assesses the likelihood of the smartphone being durable and long-lasting based on the brand reputation, build quality, and warranty information. Judgments of Goodness or Badness The judgment of goodness/badness accesses what? This is our evaluation of the desirability of the offering's features. Ex. A consumer who is in the process of choosing a new laptop. Before making a purchase decision, the consumer evaluates the goodness or badness of various aspects of the laptops available on the market. Design The consumer judges the design of the laptops based on factors such as aesthetics, build quality, and ergonomics. They may perceive a sleek and modern design as good and a bulky or outdated design as bad. Performance The consumer assesses the performance of the laptops in terms of speed, processing power, and battery life. A laptop with fast performance and long battery life may be judged as good, while one with slow performance may be seen as bad. 2 TYPES OF DECISION-MAKING MODELS Cognitive decision-making models. Deciding in a rational, systematic manner. Affective decision-making models Deciding on the basis of their feelings or emotions. 2 TYPES OF BASED DECISIONS Thought-based decisions. About offerings, consumers may use compensatory or non-compensatory models, process by brand or by attribute, and consider gains versus losses. Ex. Imagine a consumer is considering purchasing a new car. In a thought-based decision-making process, the consumer may: Research different car models based on factors like fuel efficiency, safety features, reliability, and resale value. Compare specifications, read reviews, and analyze data to make an informed choice. Consider long-term costs, such as maintenance and insurance, to assess the overall value of each option. Make a decision based on logical reasoning and objective criteria, such as cost- effectiveness and practicality. Feeling-based decisions. About offerings may rely on appraisals and feelings, affective forecasts and choices, and imagery. Ex. Now, let's consider the same consumer making a feeling-based decision about the car purchase.  The consumer visits a dealership and feels a strong emotional connection to a particular car model based on its appearance, brand image, or reputation. Emotions like excitement, desire, or status influence the consumer's decision- making process. The consumer may prioritize how the car makes them feel, such as feeling confident, stylish, or adventurous, over practical considerations. The final decision is driven by gut feelings, intuition, and emotional responses to the product. 3 Types of Contextual Factors that Can Influence the Decision Process Consumer Characteristics. These refer to the personal traits, preferences, and demographics of individuals that shape their decision-making behavior. Factors such as age, gender, income level, education, lifestyle, and values can influence how consumers perceive products, evaluate alternatives, and make decisions. In addition, consumer characteristics also include psychological factors like personality traits, attitudes, beliefs, and past experiences that play a role in shaping preferences and choices. Decision Characteristics. These pertain to the specific attributes of the decision itself, including the complexity, importance, risk, and time pressure associated with the choice. The level of involvement, perceived risk, and uncertainty surrounding the decision can impact how consumers approach the evaluation process and the criteria they use to make a choice. Lastly, decision characteristics also include factors like the number of alternatives, the availability of information, and the consequences of the decision on the individual's well-being. The Presence of a Group. It refers to the social context in which the decision is made, including the influence of family members, friends, peers, or reference groups on the individual's decision-making process. Group dynamics, social norms, peer pressure, and conformity can affect how consumers evaluate options, seek approval, and make choices that align with the expectations of others. Lastly, the presence of a group can provide social support, advice, and validation, but it can also introduce biases, conflicts, and the need to consider the preferences of others in the decision-making process. Judgment and Decision-Making Based on Low Effort Low-effort judgment and decision-making. It refers to the cognitive processes of developing judgments or views with minimal thought or consideration. In these circumstances, individuals may use heuristics, mental shortcuts, or condensed decision rules to make quick judgments or decisions. When people encounter time restrictions, limited cognitive resources, or receive complex or unclear data. Individuals may rely on heuristics to facilitate decision-making rather than conducting rigorous analysis or considering all relevant information. Heuristics. These are mental shortcuts or rules of thumb that people employ to make better judgments or solve problems. They are cognitive techniques that use past experiences, intuition, or common sense to simplify complex tasks rather than extensive evaluation. 2 COMMON TYPES OF HEURISTICS Availability Heuristic. It involves determining an event's possibility or frequency depending on how easily situations or instances related to that event appear to memory. Some factors that affect this thinking are events that are vivid, current, or have a significant emotional impact to a person. Ex. Imagine a consumer who is considering buying a new smartphone. They have heard about a particular brand through advertisements, social media posts, and recommendations from friends. Representativeness Heuristic. It involves determining an individual's involvement in a likelihood of an event based on how well they resemble or represent an identifiable pattern or stereotype. They base their conclusions on how closely this situation or particular person resembles a past event they have in mind. Ex. Imagine a consumer who is considering buying a luxury watch. They have a mental prototype of what a luxury watch should look like, which includes features such as a high-quality metal band, a prominent brand logo, and a classic and elegant design. When the consumer encounters a watch that matches this prototype, they are more likely to judge it as a true luxury watch and perceive it as a higher-quality product. What is the most important of the two efforts? High-effort judgment and decision making. This is crucial in scenarios where complex analysis, extensive research, and careful consideration of multiple factors are required. It is especially valuable when the decisions have long-term consequences, involve high risks, or need a comprehensive evaluation of options. Low-effort judgment and decision-making. This can be important in situations where time is limited, resources need to be conserved, or decisions are routine and relatively straightforward. It can be efficient and practical when quick judgments are needed or when relying on heuristics and past experiences can yield satisfactory results. Lesson 18: Marketing Ethics Marketing Ethics The code of morals and conducts used in the marketing practices. It is also understood as the systematic study of how moral standards are applied to marketing decisions. It can be represented by standards related to marketing decisions based on what is right and what is wrong. Distinct Ethical Perceptions of Marketing Ethics Do not market harmful or dangerous products. The customer should not be deceived. Pricing ethics in general. Do not over recommend product quality level to the customer Do not disparage competitors SIX ETHICAL VALUE THAT MARKETERS ARE EXPECTED TO UPHOLD Honesty. Be forthright in dealings and offer value and integrity. Responsibility. Accept consequences of marketing practices and serve the needs of customers while being good stewards of the environment. Fairness. Balance buyers needs and seller interest fairly, and avoid manipulation while protecting the information of the consumers. Respect. Acknowledge basic human dignity of all the people involved through efforts to communicate, understand and appreciate the contributions of others. Transparency. Create a spirit of openness in the practice of marketing through communication, constructive criticism, action and disclosure Citizenship. Fulfill all legal, economic, philanthropic and societal responsibilities to all stakeholders as well as give back to the community.  Lesson 19: Social Responsibility in Today’s Society Corporate Social Responsibility (CSR) refers to a business approach where companies voluntarily take responsibility for the impact of their operations on society and the environment. It encompasses a wide range of initiatives and practices that go beyond financial profit-making and aim to contribute positively to various stakeholders, including employees, customers, communities, and the environment. CSR involves integrating social, economic, and environmental concerns into business strategies, decision-making processes, and daily operations. It includes actions such as ethical business practices, philanthropy, environmental sustainability, employee engagement, and community development, all with the goal of creating a more sustainable and responsible business model. CSR is an evolving business practice that incorporates sustainable development into a company's business model. It has a positive impact on social, economic and environmental factors. CSR is a sustainable business strategy that helps companies operate more socially accountable to employees, its shareholders, and the public. What is Social Responsibility in Marketing? Positive Impact of CSR on Society, Economy, and Environment. Corporate social responsibility (CSR) can have a positive impact on social, economic, and environmental factors. Here is how CSR initiatives can contribute to each of these areas: 1. Social Impact: CSR initiatives can benefit society by addressing social issues, promoting inclusivity, and supporting local communities. Examples include: Philanthropy: Companies can donate funds or resources to charities and nonprofit organizations that work to improve education, healthcare, poverty alleviation, and other social causes. Employee Volunteering: Encouraging employees to participate in volunteer programs and community service activities can contribute to social development and enhance employee engagement. Diversity and Inclusion: Companies can promote diversity and equal opportunity in their workforce, fostering a more inclusive society and reducing inequality. 2. Economic Impact: CSR can positively influence economic factors by fostering sustainable business practices, creating employment opportunities, and contributing to economic growth. Examples include:  Ethical Sourcing: Companies can ensure their supply chains adhere to fair trade principles, promoting fair wages, safe working conditions, and environmental sustainability. Job Creation: By investing in local communities, companies can create employment opportunities, which in turn contribute to economic development and poverty reduction. 3. Environmental Impact: CSR plays a crucial role in promoting environmentally sustainable practices and reducing the impact of business activities on the environment. Examples include: Carbon Footprint Reduction: Companies can implement measures to reduce greenhouse gas emissions, increase energy efficiency, and promote the use of renewable energy sources. Waste Management: Adopting responsible waste management practices, recycling programs, and reducing packaging waste can help minimize environmental pollution. Sustainable Supply Chain: Companies can work with suppliers to ensure environmentally friendly practices, such as sustainable sourcing, reduced waste, and responsible resource extraction. Purpose of Corporate Social Responsibility Corporate social responsibility is a concept that refers to a company's commitment to operating in an ethical and sustainable manner while considering its impact on society, the environment, and human rights. Ensuring Ethical Business Conduct: This means that companies should conduct their operations in a way that is morally upright, honest, and follows accepted principles of fairness and integrity. It involves adhering to laws and regulations, avoiding corrupt practices, and being transparent in their dealings. Considering Social, Economic, and Environmental Impact: Companies are expected to be aware of their broader impact on society and the environment. This includes considering the well-being of employees, customers, and the communities they operate in. Economically, it involves creating jobs, contributing positively to local economies, and paying fair wages. Respecting Human Rights: Companies have a responsibility to respect and uphold human rights in all aspects of their business operations. This includes ensuring fair labor practices, not supporting, or engaging in child labor or forced labor and respecting the rights and dignity of all individuals associated with their business, whether they are employees or part of their supply chain. Philanthropic Causes and Community Engagement: CSR also involves companies giving back to society and the communities they serve. This can take the form of philanthropy, where they contribute financial resources or expertise to charitable causes that align with their values. Additionally, companies can engage in community initiatives, support local projects, and promote social development.  What is Social Responsibility in Marketing? Marketing social responsibility. The process of attracting customers by using an ethical business structure and supporting popular social causes. Companies create social responsibility campaigns using customer data, including their values, beliefs, and personality traits. Depending on the priorities of the target audience, businesses can take part in different campaigns. Impacts of socially responsible marketing. Practicing socially responsible marketing affects the company in several important ways, ranging from branding to financial implications. Some benefits of social marketing include improving public perception, providing opportunities for cross-promotional advertising, and establishing positive office culture. Some challenges include the immediate costs of executing a marketing strategy and the risk of alienating a certain market segment by supporting specific causes. The results of marketing using a socially responsible approach vary based on the company, the campaign, and unpredictable factors like current events and economic conditions. Benefits: Increased in sales Customer loyalty Better financial performance Greater ability to attract talent and retain staff Social Responsibility Issues in Marketing. Consumers and companies are increasingly concerned about the environmental consequences of products and marketing. Two social responsibility issues receiving particular attention in this area are how to encourage environmentally conscious behavior and how to encourage conservation behavior. Another key issue is how consumers can resist unwanted or objectionable marketing efforts. Environmentally Conscious Behavior. Marketers are directly and indirectly involved in efforts to foster environmentally conscious behavior and to address concerns about global warming. Another concern is the increasing amount of trash or garbage in our environment. Now many products are sold in refillable containers. Many companies are also being pushed by both consumers and retailers to use less product packaging or more environmentally friendly product packaging. Research about recycling demonstrates that specific beliefs about its importance and attitudes toward recycling in general can directly affect whether consumers engage in recycling behaviors and whether they perceive that recycling is inconvenient. On the other hand, environmentally conscious behaviors are most likely to occur when consumers perceive that their actions will make a difference – called perceived consumers effectiveness.