1. Behavioral Economics
1.1. Modififes Unbounded Rationality, Unbounded Willpower, and Unbounded Selfishness
1.1.1. Incorporate Bounded Rationality Into Economic Models
1.1.2. Departures from Rationality Observed in Judgements and Choices
1.1.2.1. Overconfidence
1.1.2.2. Optimism
1.1.2.3. Extrapolation
1.1.3. Complete Self-Control in Consumers is Completely Unrealistic
1.1.4. Consumers are Largely Selfish in Their Self-Interest Motives
1.2. Key Contributions of Behavioral Finance
1.2.1. Efficient Market Hypothesis
1.2.1.1. Closed-End Fund Discounts Correlated with Individual Sentiment
1.2.1.2. Constructive Understandings of How Markets Work
1.2.1.3. Violations of Unpredictability and the Overreaction to New Information
1.2.2. High Quality Data
1.3. Behavioral Approach Applied to Saving
1.3.1. Depatures from Predicted Behavior When Considering Consumption Tracks Over Life Cycles
1.3.2. Idea and Benefits of Forced Saving in Today's Society
1.3.3. Effectiveness of Tax-Advantaged Savings Programs
1.3.3.1. Individual Retirement Accounts (IRAs)
1.3.3.2. 401(k) Plans
1.3.3.3. Both Yield Changes in Behavior That Reflect Self-Interest and Bolster Self-Control
1.3.3.4. Hyperbolic Discounting in Decision-Making
1.4. Designed Institutions to Promote Better Decision-Making
2. Constrained Utility Maximization
2.1. Seeking to Maximize Total Satification With a Set of Given Restrictions
2.1.1. Consideration of Marginal Utility in Regards to Total Utility at a Decreasing Rate
2.1.2. Taking Trade-Offs Into Account to Maximize Total Utility
2.1.3. Analyzing the Marginal Utility Per Dollar
2.1.4. Personal Identification of Preferences and Choices
2.2. Consideration of Changes in Income and Price When it Comes to Budget Constraints
2.2.1. Substitution Effect: Different Incentives with Different Prices
2.2.2. Income Effect: Buying Power of Income
2.2.3. Deviations from the Initial Quantity of Demands
2.3. Unifying Power in Terms of Maximizing Satisfaction and Self-Interest
2.4. Consumer State of Mind Should be Valued in Maximization of Satisfaction
2.4.1. Behavioral Economic Principles Within Budget Constraints
2.4.2. Indifference Curves and Their Individuality
3. The Science of Customer Behavior
3.1. Sensation and Perception
3.1.1. Multitude of Stimuli to Appeal to the Senses
3.1.1.1. Visual Stimuli
3.1.1.1.1. Vivid Imagery to Facilitate Desirable Lifestyles
3.1.1.1.2. Brand Associations with Colors and Symbolism Must Cater to Cultures
3.1.1.2. Auditory Stimuli
3.1.1.2.1. Energetic, Quick Tempos to Prompt Customers to Spend More Money
3.1.1.2.2. Distinctive, Learnable Sounds Prompt Brand Recognition
3.1.1.3. Olfactory Stimuli
3.1.1.3.1. Pleasing Scents Draw Consumers In
3.1.1.3.2. Scents can Call Upon Consumer Memories (Positive Associations)
3.1.1.4. Gustatory Stimuli
3.1.1.4.1. Dramatic and Compelling Blind Taste Tests
3.1.1.4.2. Distinguish Power of the Brand from the Product Itself
3.1.1.5. Tactile Stimuli
3.1.1.5.1. Designs to Appeal to Comfort and Ease of Use
3.1.1.5.2. Clean Lines, Simplicity, and a Sensual Experience Draw Consumers In
3.1.2. Subliminal Advertising to Compel Action
3.1.2.1. Subconscious Capture to Compel Action
3.1.2.2. The Effect of Ambiguity
3.1.2.3. Mere Exposure and Perceptual Fluency with Repeated Exposures and Subtle Cues
3.2. Learning, Memory, and Emotions
3.2.1. Classical Conditioning
3.2.1.1. Neutral Stimuli to Convey Information and Reputation
3.2.1.2. Effect of Altering Name and Logo on Associations
3.2.1.3. Use of Catchy Jingles
3.2.2. Operant Conditioning
3.2.2.1. Positive Reinforcement to Appeal to Customers
3.3. Motivation
3.3.1. Maslow's Hierarchy of Needs as Product Appeals
3.3.1.1. Different Levels can Correspond to and Connect with Different Consumers
3.3.1.2. Extended Brand Lines to Climb the Pyramid
3.3.1.3. Positioning Products Highly in the Pyramid
3.3.2. Distinguishing Beyond the Pyramid
3.3.2.1. Utilitarian vs. Hedonic Products
3.3.2.2. Conformity vs. Individuality in Products
3.3.2.3. Risk Seeking vs. Risk Averse Products
3.4. Attitudes and Decision-Making
3.4.1. Beliefs and Importance Weights as Components of Attitudes Used by Marketers
3.4.2. Geert Hofstede's 5 Dimensions to Differentiate and Evaluate Countries for Marketing Implications
3.5. Cultural Differences
3.5.1. Sociocultural Effects on Responses to Advertisements and Brands
3.5.2. Social Class and Age Cohorts in Consumer Decision-Making