Drive Theory and Expectancy Theory

Q1. Two different theories, drive theory and expectancy theory, suggest different motivators that lead people to behavior. Compare these two theories and discuss how marketers can use each to stimulate their customers' behaviors.

▶ Drive theory: Biological needs that produce unpleasant states of arousal motivate us to reduce it and return to a balanced state (i.e. homeostasis, thirst, hunger, etc.) / Implication:

Expectancy theory: expectations of achieving desirable outcomes motivates our behavior. / Implication:

Q2. Explain Maslow's hierarchy of needs and its marketing implication.

▶ Frequently used in positioning and ad message

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Q3. According to attraction and compromise effect, which brands are included in the consumers' consideration set can determine which brand is more likely to be chosen. Explain why these effects occur and how marketers use the effects in marketing context.

▶ Attraction (Decoy) Effect: Tendency to prefer B over A when an alternative C, which is inferior to B but not to A, is added (i.e. Preference for the better for similar option) / Used frequently on websites. Compromise Effect: B is more preferred in the trinary choice (A, B & C) than in the binary choice (A and B).

Q4. When consumers make a purchase decision of product or service for their future consumption, whether they purchase it for the near future consumption or for the distant future consumption can influence which alternative they would choose. Explain why the time of the decision making can result in different outcomes in consumers’ choice and discuss how marketers utilize the time influence on decision making.

▶ Construal Level Theory: Preference for an object depends on psychological distance (temporal, social, spatial distance) from the object. When distance from an object is distal, people consider abstract why-features more importantly (fun, trip itself). However, when distance from an object is proximal, people consider concrete how-feature more importantly (packing, driving). e.g. vacation choices (psychological distance

Q5. Consumers frequently make decisions based on the psychological value of gains and losses. Discuss the marketing implications of these behavioral characteristics.

▶ Prospect Theory: People make decisions based on the potential value of gains and losses, rather than the final outcome. Also, people tend to be loss aversion: losses loom larger than gains. / Implications: 1) Segregate gains (benefits) and integrate losses (costs), 2) Decouple the purchase from the consumption - Flat-rate pricing (health club, mobile phone svc), credit card.