Consumer Behavior

A phenomenon showing that how a product is framed, or described, influences how people think about the product
how options are described - what happens under gains vs. losses, how is vivid/case information vs. base rate data used

Small framing actions can have large impact

Influencing consumers' choice of a product by introducing a similar but inferior product that acts as a decoy--> compared with a similar but inferior decoy product, the original brand seems much more attractive
adding a similar and dominated brand, increases attraction for the dominating brand, rather than taking away share

No--> but they increase sales of another brand on the product line
adding a similar and dominated brand increases the attraction for the dominating brand, rather than taking away share

Influencing consumers to choose an intermediate brand over a lower-level brand by adding a very high or very low level brand to the choices
pick the middle option in the given context--> intermediate brands/compromise brands seem like safe bets to many consumers
chosen more frequently when consumers are often easier to justify their decisions to others
many brands can be made to appear like compromise alternatives simply by adding extreme brands to the consideration set

Specifies how anchoring and adjustment work to determine the value of the prospect or decision in a gain vs. loss frame--> gives you the perceptual value of a "prospect" (gamble or decision)
loss function is steeper - losses loom larger than gains
marginal utility diminishes - the first $1 loss hurts more than the $101st
everything is relative to an anchor-->given the anchor you either have a gain or a loss - reason why the 101st loss is less than the 1st loss because the first loss is anchored at 0, but the 101st loss is anchored at the 100th loss

When outcomes are framed in terms of gains (ex: lives saved, sales gained, profit/share gained, etc.)
disaggregate gains - because first gain always feels really good

What people are when they focus on gains
when two alternative courses of action yield similar outcomes in terms of expected utility, people prefer the sure thing over the risky option

When outcomes are framed in terms of losses (ex: lives lost, sales lost, profit/share lost)
have more pain losing $5 than pleasure gaining $5--> losses loom larger than gains
aggregate losses - receive all bad news at once/get over it - first loss is really bad, and every time you can a new loss it's really bad, so get the bad feeling just once

What people are when outcomes are framed in terms of losses
because first loss is most painful and vividness of concrete info

A situation that occurs when losses loom larger than gains

Displeasure

Use gain frames and concrete numbers for brand choices
use probabilities for warnings

Both gains and losses appear smaller as the distance between these relative outcomes and the reference point increases

Aggregate the losses because the first loss always feels awful so you should do it at once instead of continually going back to 0 and feeling the loss again
disaggregate the gains because first gain always feels really good so you want to get that feeling over and over again