Decision Making

The three categories of consumer decision making are cognitive, habitual, and affective.

Consumer decision making is a central part of consumer behavior, but the way we evaluate and choose products (and the amount of thought we put into these choices) varies widely, depending on such dimensions as the degree of novelty or risk related to the decision. We almost constantly need to make decisions about products. Some of these decisions are important and entail great effort, whereas we make others on a virtually automatic basis. Perspectives on decision making range from a focus on habits that people develop over time to novel situations involving a great deal of risk in which consumers must carefully collect and analyze information before making a choice. Many of our decisions are highly automated; we make them largely by habit. The way we evaluate and choose a product depends on our degree of involvement with the product, the marketing message, or the purchase situation. Product involvement can range from low, where purchase decisions are made via inertia, to high, where consumers form strong bonds with what they buy.

A cognitive purchase decision is the outcome of a series of stages that results in the selection of one product over competing options.

A typical decision involves several steps. The first is problem recognition, when we realize we must take some action. This recognition may occur because a current possession malfunctions or perhaps because we have a desire for something new. Once the consumer recognizes a problem and sees it as sufficiently important to warrant some action, he or she begins the process of information search. This search may range from performing a simple memory scan to determine what he or she has done before to resolve the same problem to extensive fieldwork during which he or she consults a variety of sources to amass as much information as possible. The World Wide Web has changed the way many of us search for information. Today, our problem is more likely to weed out excess detail than to search for more information. Comparative search sites and intelligent agents help to filter and guide the search process. We may rely on cybermediaries, such as Web portals, to sort through massive amounts of information as a way to simplify the decision-making process. In the evaluation of alternatives stage, the options a person considers constitute his or her evoked set. Members of the evoked set usually share some characteristics; we categorize them similarly. The way the person mentally groups products influences which alternatives she will consider, and usually we associate some brands more strongly with these categories (i.e., they are more prototypical). When the consumer eventually must make a product choice from among alternatives, he uses one of several decision rules. Noncompensatory rules eliminate alternatives that are deficient on any of the criteria we’ve chosen. Compensatory rules, which we are more likely to apply in high-involvement situations, allow us to consider each alternative’s good and bad points more carefully to arrive at the overall best choice. Once the consumer makes a choice, he or she engages in postpurchase evaluation to determine whether it was a good one; this assessment in turn influences the process the next time the problem occurs.

The way information about a product choice is framed can prime a decision even when the consumer is unaware of this influence.

Principles of mental accounting demonstrate that the way a problem is framed and whether it is put in terms of gains or losses influences what we decide. In addition, other cues in the environment—including subtle ones of which we may not even be aware—may prime us to choose one option over another. A prime is a stimulus that encourages people to focus on some specific aspect of their lives. Much of the current work in behavioral economics demonstrates how a nudge—a deliberate change by an organization that intends to modify behavior—can result in dramatic effects.

We often rely on rules-of-thumb to make routine decisions.

In many cases, people engage in surprisingly little search. Instead, they rely on various mental shortcuts, such as brand names or price, or they may simply imitate others’ choices. We may use heuristics, or mental rules-of-thumb, to simplify decision making. In particular, we develop many market beliefs over time. One of the most common beliefs is that we can determine quality by looking at the price. Other heuristics rely on well-known brand names or a product’s country of origin as signals of product quality.
When we consistently purchase a brand over time, this pattern may be the result of true brand loyalty or simply inertia because it’s the easiest thing to do.

Marketers often need to understand consumers’ behavior rather than a consumer’s behavior.

More than one person actually makes many purchasing decisions. Collective decision making occurs whenever two or more people evaluate, select, or use a product or service. In organizations and in families, members play several different roles during the decision-making process. These roles include gatekeeper, influencer, buyer, and user.

The decision-making process differs when people choose what to buy on behalf of an organization rather than for personal use.

Organizational buyers are people who make purchasing decisions on behalf of a company or other group. Although many of the same factors that affect how they make decisions in their personal lives influence these buyers, their organizational choices tend to be more rational. Their decisions are also likely to involve more financial risk, and as the choices become more complex, it is probable that a greater number of people will be involved in making the decision. The amount of cognitive effort that goes into organizational decisions relates to internal factors, such as the individuals’ psychological characteristics, and external factors, such as the company’s willingness to tolerate risk. One of the most important determinants is the type of purchase the company wants to make: The extent of problem-solving required depends on whether the product or service it procures is simply a reorder (a straight rebuy), a reorder with minor modifications (modified rebuy), or something it has never bought before or something complex and risky (new task). Online purchasing sites revolutionize the way organizational decision makers collect and evaluate product information in business-to-business (B2B) e-commerce.

Members of a family unit play different roles and have different amounts of influence when the family makes purchase decisions.

Marketers have to understand how families make decisions. Spouses in particular have different priorities and exert varying amounts of influence in terms of effort and power. Working women tend to command more power in purchasing decisions, but on the other hand the significant growth in the number of stay-at-home fathers also influences this dynamic.