Chapter 8 Decision Making

Chapter When you finish reading this chapter you will understand why:

Objectives 1. Consum er decision m a king is a central part of consum e r behavior, but the w ay we evalua te
and choose products (and the am oun t of thought we put into these choic es) varies widely,
d ep ending on such dim ensions as the degree of novelty or risk in the decision.

2. A purchase decision a ctua lly is composed of a series of stages th a t results in the selection
of one product over compe ting options.

3. Decision m a king is not always rational.

4. Our a ccess to online sourc es changes the w ay we decide wh a t to buy.

5. We often fall back on well-le arned “ru les-of-thum b ” to m ake decisions.

6. Consum ers rely on different decision rules when th ey evalua te compe ting options.

M yM a rk e tingLa b
Visit www.pearsongiobaleditions.com /
mymarketinglab to find activities that
help you learn and review in order to
succeed in this chapter.
 R
ichard has had it. There 's only so much
longer he can go on w a tching TV on his
Source: o Ily/S h utte rsto c k.
tiny, antiqua ted bla ck-and-white set. It
was bad enough trying to squint at J e r sey S ho r e - h e can barely distinguish Snooki from The Situation
on the screen. The final straw was when he couldn’t tell the Titans from the Jaguars during an NFL
football game. When he went next door to watch the second half on M ark’s home the a ter setup, he
finally realized wha t he was missing. Budget or not, it was time to act: A man has to have his priorities.
Where to start looking? The Web, naturally. Richard checks out a few comparison-shopping Web
sites, including p r iceg r abbe r .co m and bizr ate.co m . After he narrows down his options, he ventures out
to scope out a few sets in person. He figures he’ll probably get a decent selection (and an affordable
price) at one of those huge new warehouse stores. Arriving at Zany Za ck’s Appliance Emporium, Richard
heads straight for the Video Zone in the b a c k -h e barely notices the rows of toasters, microwave ovens,
and stereos on his way. Within minutes, a smiling salesperson in a cheap suit accosts him. Even though
he could use some help, Richard tells the salesperson he’s only browsing. He figures these guys don’t
know what th ey’re talking about, and th ey’re simply out to make a sale no matter what.
Richard examines some of the features on the 60-inch color sets. He knew his friend Lorraine
had a set by Prime W ave tha t she really liked, and his sister Regina warned him to stay away from
the Kamashita. Although Richard finds a Prime W ave model loaded to the max with fe a tures such
as a sleep timer, on-screen programming menu, cable-compa tible tuner, and picture-in-picture, he
chooses the less expensive Precision 2000X because it has one feature that really catches his fancy:
stereo broadcast reception.
Later tha t day, Richard is a happy man as he sits in his easy chair and watches “JWOWW, " Pauly
D, and the others mixing it up on J e r sey Shor e. If he’s going to be a couch potato, he’s going in style.

OBJECTIVE 1
Consumer decision
We Are Problem Solvers
making is a central part
A consum er purchase is a response to a problem, which in
of consumer behavior,
Richard's case is the need for a new TV. His situation is simi
but the way we evaluate
lar to those that we encounter virtually every day of our lives (if
and choose products
you decide to make no decisions on your day off, that's still a
(and the amount of
decision!). He realizes that he wants to make a purchase, and
thought we put into
he undergoes a series of steps in order to make it. We describe
these choices) varies
these steps as (1) problem recognition, (2) information search,
widely, depending on
(3) evaluation of alternatives, and (4) product choice. Of course,
such dimensions as the
after we make a decision, its outcome affects the final step in the
degree of novelty or risk
process, in which learning occurs based on how well the choice
in the decision.
worked out. This learning process, of course, influences the
319
320 SECTION 3 Consum ers as Decision Makers

likelihood that we'll make the same choice the next time the need for a similar decision
occurs. And so on and so on___
Figure 8.1 provides an overview of this decision-making process. As we begin this
chapter we'll review different approaches we might use when we need to make a pur
chase decision. We then focus on three of the steps in the decision process:

1 How we recognize the problem, or need for a product

2 How we search for information about product choices
3 How we evaluate alternatives to arrive at a decision

Because some purchase decisions are more important than others, the amount of
effort we put into each differs. Sometimes the decision-making process is almost auto
matic; we seem to make snap judgments based on very little information. At other times
when we decide what to buy, the process resembles a full-time job. A person may literally
spend days or weeks agonizing over an important purchase such as a new home, a car, or
even an iPhone versus an Android phone.
This intensive decision-making process gets even more complicated in today's en
vironment, where we have so many options from which to choose. Ironically, for many
modern consumers one of the biggest problems they face is not having too few choices
but having too many. We describe this profusion of options as consumer hyperchoice:
a condition in which the large number of available options forces us to make repeated

Figure 8.1 STAGES IN CONSUMER

DECISION MAKING Problem Recognition

Richard realizes he’s fed up

with a black-and-white
TV that has bad
sound reproduction.

Information Search

Richard surfs the

Web to learn
about TVs.

Evaluation of Alternatives

Richard compares several

models in the store in
terms of reputation
and available features.

Product Choice

Richard chooses one model

because it has a feature
that really appeals to him.

Outcomes

Richard brings home the TV

and enjoys his purchase.
 CHAPTER 8 Decision Making 321

A purchase is a response to a problem.

Source: Darko Nova kovic / Shutterstock.

choices that may drain psychological energy while it saps our abilities to make smart
decisions.1
Although we tend to assume that more choice is always better, in fact this prefer
ence varies across the world. In some cultures people prefer to have hard choices made
for them. For example, one study compared American and French consumers who live
in different medical cultures: The U.S. norm is to emphasize patient autonomy, whereas
in France it's more typical for a doctor to make important decisions on behalf of the pa
tient. The researchers studied families that had to decide whether to take their gravely
ill infants off life support. Although the American parents claimed the right to make this
difficult choice, they also had greater trouble with their grief and coping processes than
the French parents who left this decision to their physicians.2

Perspectives on Decision Making

Consumer researchers typically apply a rational perspective to understand decision
making. In this view, we calmly and carefully integrate as much information as possible
with what we already know about a product, painstakingly weigh the pluses and minuses
of each alternative, and make a satisfactory decision. This traditional perspective relates
the economics o f information approach to the search process; it assumes that we collect
just as much data as we need to make an informed decision. We form expectations of the
value of additional information and continue to search to the extent that the rewards of
doing so (what economists call the utility) exceed the costs. This utilitarian assumption
also implies that we collect the most valuable units of information first. We absorb ad
ditional pieces only to the extent that we think they will add to what we already know.3 In
other words, we'll put ourselves out to collect as much information as we can, so long as
the process isn't too onerous or time-consuming.4
This rational outlook implies that marketing managers should carefully study steps
in decision making to understand how consumers obtain information, how they form
beliefs, and what criteria they use to make product choices. Then, companies can develop
products that emphasize the appropriate attributes, and marketers can tailor promo
tional strategies to deliver the types of information customers are most likely to desire
and in the most effective formats.5
It all sounds good, but how valid is this perspective? Sure, we do follow these
decision-making steps when we make some purchases, but this rational process doesn't
accurately portray many of our purchase decisions.6 We simply don't go through this
elaborate sequence every time we buy something. If we did, we'd spend our entire lives
making these decisions. This would leave us very little time to enjoy the things we eventu
ally decide to buy. Some of our buying behaviors simply don't seem "rational” because
they don't serve a logical purpose (you don't use that navel ring to hold a beach towel).
322 SECTION 3 Consum ers as Decision Makers

You also purchase some items with virtually no advance planning at all—have you ever
impulsively thrown a fattening candy bar into your cart while you wait at the grocery
checkout? (Hint: That's why candy bars and celeb magazines are placed there.)
Still other actions actually contradict what those rational models predict. For exam
ple, purchase momentum occurs when our initial impulse purchases actually increase
the likelihood that we will buy even more (instead of less as we satisfy our needs); it's like
we get "revved up" and plunge into a spending spree (we've all been there!).7 Research
also hints that people differ in terms of their cognitive processing style. Some of us tend
to have a rational system o f cognition that processes information analytically and sequen
tially using rules of logic, whereas others rely on an experiential system o f cognition that
processes information more holistically and in parallel.8
Researchers now realize that decision makers actually possess a repertoire of strate
gies. In a thought process we call constructive processing we evaluate the effort we'll need
to make a particular choice and then we tailor the amount of cognitive "effort" we expend
to get the job done.9 When the task requires a well-thought-out, rational approach, we'll
invest the brainpower to do it. Otherwise, we look for shortcuts or fall back on learned
responses that "automate" these choices.
We make some decisions under conditions of low involvement, as we discussed in
Chapter 4. In many of these situations, our decision is a learned response to environmental
cues (see Chapter 3), such as when we decide to buy something on impulse because it just
looks cool. We explain these types of decisions as the behavioral influence perspective.
Under these circumstances, managers and marketers should focus on the peripheral cues
that Chapter 7 describes, such as an attention-grabbing package, rather than on factual
details (i.e., as we said in Chapter 7, sell the "sizzle" rather than the "steak").10
In other cases, we're highly involved in a decision, but still we can't explain our selec
tions rationally. For example, the traditional approach is hard-pressed to account for our
choice of art, music, or even a spouse ("OMG, how did she ever wind up with him?"). In
these cases, no single quality determines the decision. Instead, the experiential perspective
stresses the Gestalt, or totality (see Chapter 2), of the product or service.11 In these contexts
marketers need to assess consumers' affective responses to products or services and then
develop offerings that create a positive emotional response.

Types of Consumer Decisions

To understand the decision-making process, it helps to think about the amount of effort
that goes into a decision each time we must make it. Consumer researchers think in terms
of a continuum, anchored on one end by habitual decision making and at the other ex
treme by extended problem solving. Many decisions fall somewhere in the middle, so we
describe these as limited problem solving. Figure 8.2 presents this continuum.

Figure 8.2 A CONTINUUM OF BUYING DECISION BEHAVIOR

ROUTINE RESPONSE BEHAVIOR --------- LIMITED PROBLEM SOLVING EXTENSIVE PROBLEM SOLVING

Low-Cost Products ------------------------------— ---------------------------------------------------------------- More Expensive Products

Frequent Purchasing ------------------------------------------------------------------— ------------------------ Infrequent Purchasing

Low Consumer Invo lve m e n t------------------------------------------------------------------------------------- High Consumer Involvement

Familiar Product Class and Brands---------------------------------------------------------------------------- Unfamiliar Product Class and Brands

Little Thought, Search, o r --------------------- ------------------------------------------------------------------ Extensive Thought, Search, and Time
Time Given to Purchase Given to Purchase
 CHAPTER 8 Decision Making 323

Extended Problem Solving

Decisions that involve extended problem solving correspond most closely to the tradi
tional decision-making perspective. As Table 8.1 indicates, we usually initiate this careful
process when the decision we have to make relates to our self-concept (see Chapter 5),
and we feel that the outcome may be risky in some way. In such cases we try to collect as
much information as possible, both from our memory (internal search) and from outside
sources such as Google (external search). Then we carefully evaluate each product alter
native; often we consider the attributes of one brand at a time and see how each brand's
attributes relate to the results we hope to get from our choice.
In the past few years we've witnessed huge growth in extended problem solving in
the online space, mostly due to the tremendous popularity of complex and engrossing
games that people play on social media platforms. A social game is a multiplayer, com
petitive, goal-oriented activity with defined rules of engagement and online connectivity
among a community of players. Because the phenomenal growth of social games is at
tributed largely to Facebook's game platform and the blockbuster game FarmVille, so
cial games are sometimes thought of as games that people play within a social network.
However, other game formats, such as Xbox Live with Kinect, also adopt social elements,
including the ability to play online with other geographically dispersed players and to
share game achievements on social profiles.12
These games, especially the so-called core games like Call o f Duty: Black OPS that
extend over time and involve hundreds or thousands of players, tend to morph from ex
tended decision making to produce the kind of flow state discussed in Chapter 4.
Social games are built upon several layers, including platform, mode, milieu, and
genre.13 Let's briefly review the basic dimensions of social games:

• A game platform refers to the hardware systems on which the game is played. Platforms
include game consoles (consoles are interactive, electronic devices used to display video
games, such as Sony's PlayStation3, Microsoft's Xbox 360, and Nintendo's Wii), com
puters (including both online games and those that require software installation on the
player's computer hard drive), and portable devices that may include smartphones or
devices specifically for game play such as the Sony PSP or Nintendo DS.14
• Mode refers to the way players experience the game world. It includes aspects such as
whether a player's activities are highly structured, whether the game is single-player
or multiplayer, whether the game is played in close physical proximity to other play
ers (or by virtual proximity), and whether the game is real-time or turn-based.
• Milieu describes the visual nature of the game, such as science fiction, fantasy, horror,
and retro.

Characteristics of Limited versus Extended Problem Solving

Limited Problem Solving Extended Problem Solving

Motivation Low risk and involvement High risk and involvement

Information Search Little search Extensive search
Information processed passively Information processed actively
In-store decision likely Multiple sources consulted prior to visits
Alternative Evaluation Weakly held beliefs Strongly held beliefs
Only most prominent criteria used Many criteria used
Alternatives perceived as basically similar Significant differences perceived among alternatives
Noncompensatory strategy used Compensatory strategy usad
Purchase Limited shopping time; may prefer self-service Many outlets shopped if needed
Choice often Influenced by store displays Communication with store personnel often desirable
324 SECTION 3 Consum ers as Decision Makers

• The genre of a game refers to the method of play. Popular genres include simulation,
action, and role-playing. Simulation games attempt to depict real-world situations
as accurately as possible. There are several subgenres, including racing simulators,
flight simulators, and "Sim" games that enable players to simulate the development
of an environment. Among social games, simulations include the highly popular
FarmVille, Pet Resort, and FishVille. Action games consist of two m ajor subgenres:
first-person shooters (FPS), where you "see" the game as your avatar sees it, and third-
person games. Examples of social action games are Epic Goal, a live-action soccer
game; Paradise Paintball, a first-person shooter social game; and Texas Hold 'Em, a
social gambling game. In role-playing games (RPGs), the players play a character role
with the goal of completing some mission. Perhaps the best-known RPG started its life
as a tabletop game: Dungeons a nd Dragons. Players adopt the identity of a character
in the game story and go about completing tasks and collecting points and items as
they strive to accomplish the intended goal. MMORPGs—massively multiplayer on
line role-playing gam es—are a type of RPG that truly encompass the social aspects of
gaming. World ofWarcraft is the largest of these, with more than 11 million subscrib
ers. Social RPGs on Facebook include Haven, Mafia Wars, Battle Stations, and Tennis
M ania.15

It's im portant for us to understand these new platforms for extended decision mak
ing, because many analysts feel that these will be a very im portant place to talk to
consumers in the next few years as gam e-based m arketin g tactics accelerate. Brands
can utilize social games for marketing in several ways—and they should! Games offer
a targeted audience, a large and wide reach, a high level of engagement, low-intrusion
methods of promotion, and a way to interact with brand fans. Numerous companies
are already experimenting with different formats for embedding their messages into
game play:

• Display ads are integrated in a game's environment as billboards, movie posters, and
storefronts. The display advertising may be static or dynamic and may include text,
images, or rich media. Rich-media advertising can run pre-roll (before the game be
gins), interlevel (between stages of the game), or post-roll (at the game's conclusion),
though interlevel is the most common placement.
• Static ads are hard-coded into the game and ensure that all players view the advertis
ing. Bing's display ad in FarmVille is an example of an in-game, static display ad. The
ad offered players the chance to earn FarmVille cash by becoming a fan of Bing on
Facebook. In the first day the ad ran, Bing earned 425,000 new fans.16
• Dynamic ads are variable; they change based on specified criteria. This technique is
managed by networks like Google AdWords, which offers insertion technology to place
ads across multiple games. The networks contract with game publishers to place ad
vertising in their games. By combining games from several publishers, networks create
a large portfolio of in-game media opportunities for advertisers. The network works
with publishers to strategically embed advertising, sell the placement to advertisers,
serve the ads into the games in the network, and manage the billing and account
ing for the process. Advertisers can choose specific game placement or allow Google
AdWords to place the ads dynamically within games in the Google Display Advertising
Network. Playfish's game portfolio includes Word Challenge, Hotel City, Who Has The
Biggest Brain?, and others. Players of these games will be exposed to commercials that
run between levels of the game.

Limited Problem Solving

Limited problem solving is usually more straightforward and simple. In these instances
we're not nearly as motivated to search for information or to evaluate each alternative
rigorously. Instead, we're likely to use simple decision rules as we choose among alterna
tives. These cognitive shortcuts (more about these later) enable us to fall back on general
guidelines, instead of having to start from scratch every time we need to decide.
 CHAPTER 8 Decision M aking 325

This Brazilian ad for a hair-loss product

LO R EAL appeals to men who take their impending
HOMME
baldness seriously.
Source: Art Director: Pedro Vargens, Creative
Directors: Bruno Richter and Victor Vicente.

Habitual Decision Making

Both extended and limited problem-solving modes involve some degree of information
search and deliberation. At the other end of the choice continuum, however, lies habitual
decision making—choices we make with little to no conscious effort. Many purchase
decisions are so routinized that we may not realize we've made them until we look in our
shopping carts! We make these choices without conscious control, which is why research
ers call this process automaticity.11
Although this kind of thoughtless activity may seem dangerous or at best stupid in
many cases, it actually makes sense! When we develop these habitual, repetitive behav
iors, we minimize the time and energy spent on mundane purchase decisions. However,
habitual decision making poses a problem when a marketer tries to introduce a new way
to do an old task. In this situation she must convince us to "unfreeze" our former habit
and replace it with a new one—perhaps to use an ATM instead of a live bank teller, or
switch to a self-service gas pump instead of having an attendant wait on us.

OBJECTIVE 2
A purchase decision
Steps in the Decision-Making M yM a rk e tingLa b
actually is composed of Process Visit www.psarsonglobaleditions.com /
mymarketinglab to test your understanding
a series of stages that
Richard didn't suddenly wake up and crave a new TV. He went of chapter objectives.
results in the selection
of one product over through several steps between the time he felt the need for a new
competing options. boob tube and when he actually brought one home. Let's review
the basic steps in this process.

Problem Recognition
Ford's plan to promote its Fusion hybrid model focused on people who aren't thinking
about buying a new car—at least not right now. Its TV commercials targeted what the auto
industry terms the "upper funnel," or potential buyers down the road. Ford's research
found that a large number of U.S. drivers still are unaware of the Fusion. The company
is confident that it can close sales if and when customers decide to buy a new car. But,
its weak spot is to get people into the frame of mind where they want to do that. To cre
ate desire where none exists yet, visitors to a special Web site entered to win a trip and a
new Fusion. Ford publicized the sweepstakes on Twitter and Facebook; during the first
326 SECTION 3 Consum ers as Decision Makers

This Dutch ad encourages consumers to

recognize a problem: They need to get out
and go to the movies asap!
Source: © KesselsKramer, Amsterdam .

two weeks of the promotion, almost 70,000 people requested more information about
the car.18
Problem recognition occurs at what Ford terms "the upper funnel,” when we ex
perience a significant difference between our current state of affairs and some state we
desire. We realize that to get from here to there, we need to solve a problem, which may
be small or large, simple or complex. A person who unexpectedly runs out of gas on the
highway has a problem, as does the person who becomes dissatisfied with the image of
his car, even though there is nothing mechanically wrong with it. Although the quality of
Richard's TV had not changed, he altered his standard o f comparison, and as a result he
had a new problem to solve: how to improve his TV experience.
Figure 8.3 shows that a problem arises in one of two ways. The person who runs out of
gas experiences a decline in the quality of his actual state ( need recognition). In contrast,
the person who craves a newer, flashier car moves his ideal state upward ( opportunity rec
ognition). Either way, there is a gulf between the actual state and the ideal state.19Richard
perceived a problem due to opportunity recognition: He moved his ideal state upward in
terms of the quality of TV reception he craved.

Ideal

Ideal State Ideal

I
Actual State Actual

I
Actual

NO PROBLEM OPPORTUNITY NEED

RECOGNITION RECOGNITION
F igure 8.3 PROBLEM RECOGNITION:
SHIFTS IN ACTUAL OR IDEAL STATES
 CHAPTER 8 Decision Making 327

Need recognition occurs in several ways. A person's actual state can decrease if she
runs out of a product, or if she buys a product that doesn't adequately satisfy her needs, Marketing Pitfall
or if she realizes she has a new need or desire. For example, when you buy a house, this
sets off an avalanche of other choices because now you need to buy many new things to
Some consumers really
fill it—assuming there's any money left over! In contrast, opportunity recognition often have trouble searching
occurs when we're exposed to different or better-quality products. This happens because for information-because
our circumstances change, as when we start college or land a new job, for example. As they have difficulty read
our frame of reference shifts, we make purchases to adapt to the new environment. That ing. When we do consumer research, we typi
awesome pair of True Religion jeans you just scored somehow won't make it during a job cally assume that our respondents are fully
interview. literate and thus are able to find information,
identify products, and conduct transactions
with few problems. However, it’s worth noting
Information Search that, in fact, more than half of the U.S. popu
lation reads at or below a sixth-grade level—
Once a consumer recognizes a problem, she needs the 411 to solve it. Information search
and that roughly half are unable to master
is the process by which we survey the environment for appropriate data to make a reason
specific aspects of shopping. This fact re
able decision. In this section we'll review some of the factors this search involves.20 minds us to think more about the low-literate
consumer who is at a big disadvantage in the
Types of Information Search marketplace. Some of these people (whom
You might recognize a need and then search the marketplace for specific information (a researchers term social isolates) cope with
process we call prepurchase search). However, many of us, especially veteran shoppers, the stigma of illiteracy by avoiding situations
enjoy browsing just for the fun of it or because we like to stay up-to-date on what's hap in which they will have to reveal this problem.
pening in the marketplace. Those shopaholics engage in ongoing s e a r c h } 1 They may choose not to eat at a restaurant
It helps to distinguish between internal and external search. As a result of our prior with an unfamiliar menu, for example. Low-
experience and the fact that we live in a consumer culture, each of us has some degree literate consumers rely heavily on visual cues,
including brand logos and store layouts, to
of knowledge already in memory about many products. When a purchase decision con
navigate in retail settings, but they often
fronts us, we may engage in internal search as we scan our own memory banks to as
make mistakes when they select similarly
semble information about different product alternatives (see Chapter 3). Usually, though,
packaged products (for example, brand line
even those of us who are the most market-savvy need to supplement this knowledge with extensions). They also encounter problems
external search, so we also obtain information from advertisements, friends, or just plain with innu m e r acy (understanding numbers);
people-watching. A Finnish study demonstrated that what our neighbors buy affects our many low-literate people have difficulty know
own decision making. The researchers discovered that when one of a person's 10 nearest ing, for example, whether they have enough
neighbors bought a car, the odds that the person would buy a car of the same make during money to purchase the items in their cart and
the next week and a half jumped 86 percent.22 unethical merchants may cheat them out of
the correct amount of change. Not surpris
ingly, these challenges create an emotional
burden for ow-literate consumers, who expe
rience stress, anxiety, fear, shame, and other
negative emotions before, during, and after
they shop.23

This ad from Dubai reminds consumers of a

need they may not think about too often-to
clean their drains.
Source: Courtesy of TBWA / RAAD, Dubai.
328 SECTION 3 Consum ers as Decision Makers

Deliberate versus “Ac cid e n ta l” Se arch. We may know about a product due to directed
learning: On a previous occasion we've already searched for relevant information. A par
ent who bought a birthday cake for one child last month, for example, probably has a
good idea of the best kind to buy for another child this month.
Other times, however, we acquire information in a more passive manner. Even
though a product may not be of direct interest to us today, we still encounter advertising,
packaging, and sales promotion activities that result in incidental learning. Mere expo
sure over time to conditioned stimuli and observations of others makes us learn a lot of
information that we may not need for some time, if ever (think of all those advertising
jingles you can't get out of your head). For marketers, this is one of the benefits of steady,
"low-dose" advertising; they establish and maintain product associations until the time
we need them.
In some cases, we may be so expert about a product category (or at least believe
we are) that we don't conduct any additional search. Frequently, however, our own
knowledge is not sufficient to make an adequate decision, so we must look elsewhere
for more information. The sources we consult for advice vary: They may be impersonal
and marketer-dominated sources, such as retailers and catalogs; they may be friends
and family members; or they may be unbiased third parties, such as Consumer Reports.24

Online Search
When we search online for product information, we're a perfect target for advertisers
because we declare our desire to make a purchase. Recognizing this, many companies
pay search engines like Google, as well as Bing, Yahoo!, and Ask.com, to show ads to
users who search for their brand names. However, when Doubleclick (an online market
ing company) looked closely at what people search for, its analysts found that we rarely
specify brand names in our queries. Instead, most prepurchase searches use only generic
terms, such as hard drive. Consumers tend to make these searches early on and then
conduct a small flurry of brand-name queries right before they buy.25
Not surprisingly, social media platforms now play a major role in the search process.
Although about 60 percent of consumers now start their online process by typing queries
into a search engine such as Google or Bing; 40 percent now continue their quest for
more information on other social media platforms such as blogs, YouTube, Twitter, and
Facebook. The goal here is not to collect more technical or performance information, but
to get other people's opinions about options in the product category—and to eliminate
some brands from consideration when others ding them. What's more, after they buy a
brand, about three-fourths of shoppers who use social media in the process choose to
follow it on the company's Facebook page so they can continue to engage with it in the
future.26

OBJECTIVE 3 Do We Always Search Rationally?

Decision making is not
As we've seen, we don't necessarily engage in a rational search
always rational.
process where we carefully identify every alternative before we
choose the one we want. In fact, the amount of external search
we do for most products is surprisingly small, even when we would benefit if we had more
information. In fact, lower-income shoppers, who have more to lose when they make a
bad purchase, actually search less before they buy than do more affluent people.27
One widely used distinction is between a decision strategy that seeks to deliver the
best possible result (maximizing) and one that simply tries to yield an adequate solu
tion, often as a way to reduce the costs of the decision-making process. This is called a
satisficing solution (economist Herbert Simon even won a Nobel Prize for this idea in
1956). Because we rarely have the resources (especially the time) to weigh every pos
sible factor into a decision, we will often happily settle for a solution that is just good
enough. This perspective on decision making is called bounded rationality. These two
extremes have huge implications for marketing and retailing strategy, because they im
ply very different approaches to customers. Indeed, the maximizer strongly resembles
 CHAPTER 8 Decision Making 329

Search applications offer consumers

assistance with virtually any kind of decision,
such as this one that simplifies the quest
for the right breed of dog.
Source: Dog Breed Comparison from FindTheBest.

the high-involvement consumer we discussed in Chapter 4; she is going to go all out to

explore as much information as she can before she decides. In contrast, the satisficer
resembles the low-involvement consumer who will probably use some simple shortcuts
(that we'll discuss shortly) to just pick something decent and get on with her life. Indeed,
some recent research suggests that maximizers may be so thorough they don't even rely
on their past experiences to guide their current choice. Instead, they start almost from
scratch to research options for each unique decision situation. The researchers term this
the Sisyphus Effect.28 Sisyphus was a famous figure in Greek mythology; he was sen
tenced for all eternity to push a huge boulder up a hill, only to watch it roll back down just
before it reached the top so that he had to start over. (Kind of like having your hard drive
crash just before you finish that massive term paper___ )
Like our friend Richard, many consumers are satisficers; typically they visit only one
or two stores and rarely seek out unbiased information sources before they make a pur
chase decision, especially when they have little time available to do so.29 This pattern
is especially prevalent for decisions about durable goods, such as appliances or autos,
even when these products represent significant investments. One study of Australian car
330 SECTION 3 Consum ers as Decision Makers

buyers found that more than a third had made two or fewer trips to inspect cars prior to
buying one.30
This tendency to avoid external search is less prevalent when consumers consider
the purchase of symbolic items, such as clothing. In those cases, not surprisingly, people
tend to do a fair amount of external search, although most of it involves asking peers'
opinions.31 Although the stakes may be lower financially, people may see these self-
expressive decisions as having dire social consequences if they make the wrong choice.
The level of risk, a concept we'll discuss shortly, is high.
In addition, we often engage in brand switching, even if our current brand satisfies
our needs. When researchers for British brewer Bass Export studied the American beer
market, they discovered that many drinkers have a repertoire of two to six favorite brands
rather than one clear favorite.32
Sometimes, it seems we simply like to try new things—we crave variety as a form of
stimulation or to reduce boredom. Variety seeking, the desire to choose new alterna
tives over more familiar ones, even influences us to switch from our favorite products to
ones we like less! This can occur even before we becom e satiated, or tired, of our favorite.
Research supports the idea that we are willing to trade enjoyment for variety because the
unpredictability itselfis rewarding.33 In fact, one study suggests that although consumers
frequently consume items to the point where they no longer enjoy them, the marketer
can counteract this variety amnesia simply by prompting them to recall the variety of
alternative items they have consumed in the past.34
We're especially likely to look for variety when we are in a good mood, or when there
isn't a lot of other stuff going on.35 In the case of foods and beverages, we may decide to
try new things due to sensory-specific satiety. Put simply, this means the pleasantness of a
food item we have just eaten drops, whereas the pleasantness of uneaten foods remains
unchanged.36 So, even though we have favorites, we still like to sample other possibilities.
However, when the decision situation is ambiguous, or when there is little information
about competing brands, we tend to opt for the safe choice. Figure 8.4 shows the brand
attributes consumers consider most important when they choose among alternatives,
according to a survey that Advertising Age conducted.

Mental Accounting:
Biases in the Decision-Making Process
Consider the following scenario: You've scored a free ticket to a m ajor football game. At
the last minute, though, a sudden snowstorm makes it somewhat dangerous to get to the
stadium. Would you still go? Now, assume the same game and snowstorm—except this
time you paid a small fortune for the ticket. Would you head out in the storm in this case?
Analyses of people's responses to this situation and to other similar puzzles illus
trate principles of mental accounting. This process demonstrates that the way we pose a
problem (we call this framing) and whether it's phrased in terms of gains or losses influ
ences our decisions.37 In this case, researchers find that people are more likely to risk their
personal safety in the storm if they paid for the football ticket than if it's a freebie. Only
the most die-hard fan would fail to recognize that this is an irrational choice, because the
risk is the same regardless of whether you got a great deal on the ticket. Researchers call
this decision-making bias the sunk-cost fallacy: If we've paid for something, we're more
reluctant to waste it.

Behavioral Economics
In recent years, the recognition that many decisions are not based on a maximization
strategy has contributed to the huge resurgence of the field of behavioral economics,
a blend of psychology and econom ics that studies how consumers make economic de
cisions. Unlike more traditional econom ic approaches, this hybrid perspective recog
nizes that our decisions are not always based on "logical" factors such as price or quality.
Rather, they are colored by our emotions and even very subtle cues in the environment
that steer us toward some products and away from others. Numerous books and blogs,
 CHAPTER 8 Decision Making 331

Figure 8.4 ADVERTISING AGE POLL: IMPORTANCE OF BRAND ATTRIBUTES

Advertising Age / ARC Survey: Brand Attributes

Importance of brand attributes: Brands vs. generics: How different age groups
Across all age groups, these were the most important value brands, assuming an equivalent discount
attributes people say they will consider in making generic product is available.
brand purchases. 70%
I
Trustworthy 60%
</>
Energy-saving c
03 50%
E
Recyclable a.
GO 40%
Socially responsible OS

•c*-> 30%
o I
Using the latest 03
technology B
o 20%
CL

Offers personalized and 10%

I
attentive service
0%
a
Offers customer service 13-17 18-25 26-35 36-49 50-69
that makes an effort to Age
keep in contact with you
Prefer brands Prefer generics
Simple

Small or space-saving
The five most important brand a ttributes by age group
Fun 13-17 18-25 26-35 36-49 50-69
A well-known brand name
Trustworthy Trustworthy Trustworthy Trustworthy Trustworthy
Modern

Personalized or Using the

customized products latest Energy- Energy- Energy- Energy-
technology saving saving sa\ ing saving

Using the Using the

Energy- latest latest Socially Socially
saving technology technology responsible responsible

Recyclable Recyclable Recyclable Recyclable Recyclable

Offers
Fun personalized Socially Simple Simple
and attentive responsible
service

10
Future Importance

including the huge bestsellers Freakonomics and Predictably Irrational, come from and
promote this view of the less-than-logical consumer.38
As we'll see shortly, many of the principles in behavioral econom ics deal with the
way a choice is put into context (earlier we referred to this as fram ing), along with the bias
and experience that each consum er brings to that purchase. Daniel Kahneman, the
"father" of behavioral econom ics (he won a Nobel Prize in Economics for his seminal
work) gave an example of one type of framing called anchoring, which refers to the fact
that when people are given a number, they tend to use that number as the standard for
332 SECTION 3 Consum ers as Decision Makers

future judgments. He noted that when he asked people if the tallest tree in the world is
more or less than 900 feet, most people would correctly guess that is way too tall. Now,
however, he's made you think of very tall trees, so perhaps a 500-foot-tall tree would seem
small to you. The opposite would have been true if he had used 100 feet as an "anchor"
number.39
Whether we focus on the present or the future is another example of how the way we
frame an issue influences the options we choose and how we feel about them. The con
dition of hyperopia (the medical term for people who have farsighted vision) describes
people who are so obsessed with preparing for the future that they can't enjoy the pres
ent. College students who participated in a study on this phenomenon reported that they
regretted not working, studying, or saving money during their winter breaks. But, when
researchers asked them to imagine how they will feel about this break a year from now,
their biggest regrets were that they didn't have enough fun or travel enough. In another
study, female subjects received a ticket for a lottery that would be held three months later.
They had to choose in advance from one of two prizes if they won: either $85 in cash or
an $80 voucher for a massage or facial at a spa. Even though they were reminded that
they could use the $85 in cash to get a spa treatment and pocket the $5 difference, more
than a third of the women chose the voucher. Researchers found similar results in other
situations: When people had to choose between cash and prizes such as bottles of wine
or dinners out, many of them chose the luxuries even though the cash was a better deal.
One participant observed, "If I took the cash it would end up going into the rent."40
Loss aversion is another bias. This means that we emphasize our losses more than
our gains. For example, for most people losing money is more unpleasant than gaining
money is pleasant. Prospect theory describes how people make choices; it defines utility
in terms of gains and losses. We evaluate the riskiness of a decision differently if it's put
to us in terms of what we stand to gain rather than what we stand to lose.41 To illustrate
this bias, consider the following choices. For each, would you take the safe bet or choose
to gamble?

• Option 1—You're given $30 and a chance to flip a coin: Heads you win $9, tails you
lose $9.
• Option 2—You get $30 outright or you accept a coin flip that will win you either $39
or $21.

In one study, 70 percent of those who got option 1 chose to gamble, compared to only
43 percent of those who got option 2—yet the odds are the same for both options! The
difference is that we prefer to "play with the house money"; that is, we're more willing to
take risks when we think we're using someone else's resources. So, contrary to a rational
decision-making perspective, we value money differently depending on its source. This
explains, for example, why the same person who chooses to blow a big bonus on a $2,000
pair of Manolo Blahnik heels would never consider taking that same amount out of her
savings account to buy shoes.
Finally, research in mental accounting demonstrates that extraneous characteristics
of the choice situation can influence our selections, even though they wouldn’t i/we were
totally rational decision makers. Researchers gave survey participants one of the two ver
sions of this scenario:

You are lying on the beach on a hot day. All you have to drink is ice water. For the past hour you
have been thinking about how much you would enjoy a nice cold bottle of your favorite brand
of beer. A com panion gets up to go make a phone call and offers to bring back a beer from the
only nearby place where beer is sold (either a fancy resort hotel or a small, run-down grocery
store, depending on the version you're given). He says that the beer might be expensive and
so asks how much you are willing to pay for it. What price do you tell him? In the survey, the
median price participants who read the fancy-resort version gave was $2.65, but those who
got the grocery-store version were only willing to pay $1.50. In both versions the consumption
act is the same, the beer is the same, and they don't consum e any "atm osphere" because they
drink the beer on the beach.42 So much for rational decision making!
 CHAPTER 8 Decision Making 333

Researchers continue to identify factors that bias our decisions—and many of these
are factors that operate beneath the level of conscious awareness. Consider this exam
ple: During the 2010 New York Republican gubernatorial primary, one candidate (Carl
Paladino) mailed out thousands of campaign ads impregnated with the smell of rotting
garbage. The tagline was “Something Stinks in Albany" and the mailings included photos
of scandal-tainted New York Democrats (the message had its intended effect, but the
candidate lost for other reasons).
Many researchers believe that the primitive emotion of disgust evolved to protect
us from contamination; we learned over the years to avoid putrid meat and other foul
substances linked to pathogens. As a result, even the slight odor of something nasty elicits
a universal reaction—the wrinkling of the nose, curling of the upper lips, and protru
sion of the tongue. Wrinkling the nose has been shown to prevent pathogens from enter
ing through the nasal cavity, and sticking out the tongue aids in the expulsion of tainted
food and is a com m on precursor to vomiting. OK, now that you're sufficiently grossed
out, what (you may ask in disgust) does this have to do with marketing and persuasion?
Well, disgust also exerts a powerful effect on our judgments. People who experience this

CB AS I SEE IT
Professor Gavan Fitzsimmons, Duke University

minds they are unaware of, and con have shown dramatic increases in
sum ers even engage in behavior that choices of one brand versus an
they are not conscious of (e.g., con other as a result of incidental brand
sider many habitual behaviors). These exposure.
nonconscious processes are often The future of rese arch on uncon
adaptive and helpful for the consumer, scious consum er behavior is likely
but can also at tim es be detrimental. to continue to document domains in
One interesting recent example which the consum er is influenced out
from our own lab involved sublimi- side of his or her awareness. Contexts
nally exposing consum ers to brand in which consum ers find them se lves
logos— in several studies, either an taxed, exhausted, or overwhelmed
F or many ye ars consum er rese arch Apple or an IBM logo. Incidental brand are all ripe for unconscious influence,
ers have thought of the consum er exposures occur every day (recent which sadly have become the default
largely as a conscious, thinking ma estim a tes range between 3,000 and rather than the exception for most con
chine. Consum ers consider what is 10,000 tim es in a single day for the sum ers. Some of the most interesting
important to them, evaluate choice typical American consum er) and thus questions remaining deal with exactly
options on those a lternatives on those we were curious if they could influ how nonconscious processes work,
dimensions, and make a decision. ence consum er behavior in meaningful and when they may be adaptive versus
Recently, however, a growing group ways. Apple or IBM logos were flashed harmful. If helpful, how can consum
of consum er rese archers has started on a screen for very brief intervals— ers, firms, and public policymakers
to revisit an old idea tha t had been from 10 to 50 milliseconds— to mimic embrace and encourage them? For
largely considered debunked: namely, this real-world incidental brand expo example, many consum ers might like
tha t much of wha t goes on in the life sure. Participants had no conscious to be more creative, or faster, for ex
of a consum er occurs outside of his experience of seeing a brand, and ample, and thus might strategically
or her conscious awareness. believed they were only seeing a box surround themse lves with Apple or
The idea tha t consum ers are in on the left or right of the screen. Our Speedo logos. Over time, exposure to
fluenced outside of the ir conscious results showed that nonconscious ex these logos will become incidental and
a w areness is frightening to many con posure to the Apple logo led consum they may find themse lves increasingly
sum ers, and has thus received consid ers to be significantly more creative creative or faster. If such exposures
erable resistance. And yet, the data than consum ers similarly exposed to are harmful, what can these groups do
become more and more clear that con an IBM logo. This incidental brand to minimize their effects? Preliminary
sum ers are influenced by stimuli they exposure activated a goal in consum evidence suggests that warnings pre
don’t realize they have been exposed ers tha t they actively pursued until ceding exposure can, at least in part,
to, processes occur in the consum ers’ they could sa tisfy it. Similar studies dampen these nonconscious effects.
334 SECTION 3 Consum ers as Decision Makers

emotion become harsher in their judgments of moral offenses and offenders. In one ex
periment, people who sat in a foul-smelling room or at a desk cluttered with dirty food
containers judged acts like lying on a resume or keeping a wallet found on the street
as more immoral than individuals who were asked to make the same judgments in a
clean environment. In another study, survey respondents who were randomly asked to
complete the items while they stood in front of a hand sanitizer gave more conservative
responses than those who stood in another part of the hallway.43 Scientists continue to
identify other, similar effects of subtle environmental cues that carry over onto our judg
ments of people and products; for instance, people who hold a cold cup of water before
they are asked to make ratings judge other people and objects as “colder" than do those
who were given a hot cup of coffee.

How Much Do We Search?

As a general rule, we search more when the purchase is important, when we have more
of a need to learn more about the purchase, or when it's easy to obtain the relevant infor
mation.44 Consumers differ in the amount of search they tend to undertake, regardless of
the product category in question. All things being equal, younger, better-educated people
who enjoy the shopping/fact-finding process tend to conduct more information search.
Women are more inclined to search than men are, as are those who place greater value
on style and the image they present.45
Does knowing something about the product make it more or less likely that we will
engage in search? The answer to this question isn't as obvious as it first appears: Product
experts and novices use very different procedures during decision making. Novices who
know little about a product should be the most motivated to find out more about it. How
ever, experts are more familiar with the product category, so they should be better able to
understand the meaning of any new product information they might acquire.
So, who searches more? The answer is neither: Search tends to be greatest among
those consumers who are moderately knowledgeable about the product. We find an
inverted-U relationship between knowledge and external search effort, as Figure 8.5
shows. People with very limited expertise may not feel they are competent to search ex
tensively. In fact, they may not even know where to start. Richard, who did not spend a
lot of time researching his purchase, is typical. He visited one store, and he looked only
at brands with which he was already familiar. In addition, he focused on only a small
number of product features.46
Because experts have a better sense of what information is relevant to the deci
sion, they engage in selective search, which means their efforts are more focused and
efficient. In contrast, novices are more likely to rely on the opinions of others and on
“nonfunctional” attributes, such as brand name and price, to distinguish among alterna
tives. Finally, novice consumers may process information in a “top-down” rather than a

Figure 8.5 THE RELATIONSHIP

BETWEEN AMOUNT OF INFORMATION PRODUCT KNOWLEDGE
SEARCH AND PRODUCT KNOWLEDGE
 CHAPTER 8 Decision Making 335

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a way to reduce the perceived risk in buying
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"bottom-up" m anner—they focus less on details than on the big picture. For instance,
they may be more impressed by the sheer amount of technical information an ad presents
than by the actual significance of the claims it makes.47
Ironically, people who have details about a product before they buy it do not expect
to be as happy with it as do those who got only ambiguous information. The so-called
blissful ignorance effect apparently occurs because we want to feel like we've bought
the right thing—and if we know precisely how the product performs, it's not as easy to
rationalize away any shortcomings. In one experiment, some subjects were told of a m an
ufacturer's claims about a hand lotion and informed that separate research had shown
that 50 percent of people in fact obtained these benefits. Another set of subjects also
heard about the manufacturers' claims, but they were told that the results from indepen
dent research were not yet available. Those who were provided with less information (the
latter group) actually expected the product to perform better. In other words, the less we
know about something, the easier it is to persuade ourselves that we like it.48
336 SECTION 3 Consum ers as Decision Makers

Perceived Risk
As a rule, purchase decisions that involve extensive search also entail perceived risk, or
the belief that there may be negative consequences if you use or don't use a product or
service. This may occur when the product is expensive or is complex and hard to under
stand. Alternatively, perceived risk can be a factor when others can see what we choose,
and we may be embarrassed if we make the wrong choice.49
Figure 8.6 lists five kinds of risk—including objective (e.g., physical danger) and sub
jective (e.g., social embarrassment) factors—as well as the products each type tends to
affect. Perceived risk is less of a problem for consumers who have greater "risk capital,"
because they have less to lose from a poor choice. For example, a highly self-confident
person might worry less than a vulnerable, insecure person who chooses a brand that
peers think isn't cool.

How Do We Decide Among Alternatives?

Much of the effort we put into a purchase decision occurs at the stage where we have to
put the pedal to the metal and actually choose a product from several alternatives. This
may not be easy; modern consumer society abounds with choices. In some cases, there
may be literally hundreds of different brands (as in cigarettes) or different variations of
the same brand (as in shades of lipstick).
Ask a friend to name all the brands of perfume she can think of. The odds are she will
reel off three to five names rather quickly, then stop and think awhile before she comes
up with a few more. She's probably very familiar with the first set of brands, and in fact
she probably wears one or more of these. Her list may also contain one or two brands that

BUYERS MOST PURCHASES MOST

SENSITIVE TO RISK SUBJECT TO RISK

Risk capital consists of money High-ticket items that require

MONETARY and property. Those with relatively substantial expenditures are most
RISK little income and wealth are most subject to this form of risk.
vulnerable.

Risk capital consists of Products or services whose

FUNCTIONAL alternative means of performing purchase and use requires the
RISK the function or meeting the need. buyer's exclusive commitment are
Practical consumers are most most sensitive.
sensitive.

Risk capital consists of physical Mechanical or electrical goods

vigor, health, and vitality. Those (such as vehicles or flammables),
PHYSICAL drugs and medical treatment, and
RISK who are elderly, frail, or in ill
health are most vulnerable. food and beverages are most
sensitive.

Risk capital consists of self-esteem Socially visible or symbolic goods,

SOCIAL and self-confidence. Those who are such as clothes, jewelry, cars,
RISK insecure and uncertain are most homes, or sports equipment are
sensitive. most subject to social risk.

Risk capital consists of affiliations Expensive personal luxuries that

PSYCHO and status. Those lacking may engender guilt, durables, and
LOGICAL self-respect or attractiveness to services whose use demands
RISK peers are most sensitive. self-discipline or sacrifice are
most sensitive.
Figure 8.6 FIVE TYPES
O F PERCEIVED RISK
 CHAPTER 8 Decision Making 337

This British ad appeals to social risk.

Source: © Abbott Mead Vickers BBDO, London.

YO, SEWER BOY. Ad created and produced by Simon Langley,

Richard Morgan, and John Offenbach.

NEVER HEARD OF
ANTI-PERSPIRANT?

RIGHT THROUGH THE MY.

she doesn't like; to the contrary, they come to mind because she thinks they smell nasty
or are unsophisticated. Note also that there are many, many more brands on the market
that she did not name at all.
If your friend goes to the store to buy perfume, it is likely that she will consider buying
some or most of the brands she listed initially. She might also entertain a few more pos
sibilities if these come to her attention while she's at the fragrance counter (for example,
if an employee "ambushes" her with a scent sample as she walks down the aisle).
How do we decide which criteria are important, and how do we narrow down prod
uct alternatives to an acceptable number and eventually choose one instead of others?
The answer varies depending on the decision-making process we use. A person who
engages in extended problem solving may carefully evaluate several brands, whereas
someone who makes a habitual decision may not consider any alternatives to his normal
brand. Furthermore, some evidence indicates that we do more extended processing in
situations that arouse negative emotions because of conflicts we feel among the available
choices. This is most likely to occur when there are difficult tradeoffs; for example, when a
person has to choose between the risks involved in having a bypass operation versus the
potential improvement in his life if the operation succeeds.50
We call the alternatives a consumer knows about his evoked set and the ones that he
actually considers his consideration set (often we don't seriously consider every single
brand we know about, perhaps because it's out of our price range or we've had a bad
experience with it).51 Recall that Richard did not know much about the technical aspects
338 SECTION 3 Consum ers as Decision Makers

This Canadian ad from Kiwi presents

a solution to an everyday problem.
Source: Courtesy of Sara Lee Corporation.

Restore your shine in just seconds.

kiwicare.com

of television sets, and he had only a few major brands in memory. Of these, two were ac
ceptable possibilities and one was not.
Consumers often consider a surprisingly small number of alternatives, especially
with all the choices available to us. A cross-national study found that people generally
include just a few products in their consideration, although this amount varies by prod
uct category and across countries. For example, on average American beer consumers
considered only three brands, whereas Canadian consumers typically considered seven
brands. In contrast, whereas auto buyers in Norway studied two alternatives, American
consumers on average looked at more than eight models before they decided.52 We seem
to be a lot more picky about our wheels than our brews.
For obvious reasons, a marketer who finds that his brand is not in his target market's
evoked set has cause to worry. You often don't get a second chance to make a good first
impression; a consumer isn't likely to place a product in his evoked set after he has al
ready considered it and rejected it. Indeed, we're more likely to add a new brand to the
evoked set than one that we previously considered but passed over, even after a marketer
has provided additional positive information about it.53 For marketers, a consum er's
 CHAPTER 8 Decision Making 339

Salternative.

This ad for Sunkist lemon juice attempts to

reluctance to give a rejected product a second chance underscores the importance of establish a new category for the product by
ensuring that it performs well from the time the company introduces it. repositioning it as a salt substitute.
An advertising campaign for Hyundai illustrates how hard a company sometimes Source: Courtesy of Sunkist Growers.
has to work to get its brand into consumers' consideration sets. Many people think of
Hyundai strictly as a low-cost vehicle, even though it has received high marks for quality
in recent years. The carmaker's "Think About It" campaign encouraged consumers to
reconsider their long-held beliefs through frank statements like "The logo is there to tell
you what the car is, not who you are" and "When a car company charges for roadside as
sistance, aren't they just helping themselves?" As Hyundai's vice president for marketing
in America explained, "Unless we give people a compelling reason to shuffle the brand
deck, they'll stand with the brands they know rather than make that switch."54

How Do We Put Products into Categories?

Remember that when consumers process product information, they don't do it in a vac
uum. They evaluate its attributes in terms of what they already know about the item or
other similar products. A person who thinks about a particular 35mm camera will most
likely compare it to other 35 mm cameras rather than to a disposable camera. Because
the category in which a consumer places a product determines the other products she will
compare it to, the way we classify a brand in our minds plays a big role in how we evaluate
it. These classifications derive from different product attributes, including appearance
(e.g., we assume that chocolates in silver or gold wrappings are more upscale), price (we
view items with price endings in .99 as cheaper than those that end in .00), or previously
learned connections (if it has the name Porsche on it, it must be expensive).55
The products in a consum er's evoked set are likely to share some similar features.
This process can either help or hurt a product, depending on what people compare it to.
For example, in one survey, about 25 percent of consumers said they would be less likely
to buy a product made of hemp if they know it's derived from the same plant from which
marijuana comes (but without any of the latter's effects). When we come across a new
product, we tend to place it into an existing category rather than create a new category.56
Of course, that's one of the big hurdles a new form of technology has to clear: Before
people will buy a microwave oven, MP3 player, or GPS, they need to make sense out of
the category to which it belongs.
340 SECTION 3 Consum ers as Decision Makers

It is important to understand how we cognitively represent this information in a

k n o w le d g e structure. This term refers to a set of beliefs and the way we organize these
beliefs in our minds.57 We discussed these knowledge structures in Chapter 4. Their
makeup matters to marketers because they want to ensure that customers correctly group
their products. For example, General Foods brought out a new line of Ie ll-0 flavors, such
as Cranberry Orange, that it called Jell-0 Gelatin Flavors for Salads. Unfortunately, the
company discovered that people used the product only for salad, because the name en
couraged them to put the product in their "salad” structure rather than in their "dessert"
structure. General Foods dropped the product line.58
Typically we represent a product in a cognitive structure at one of three levels. To
understand this idea, consider how someone might respond to these questions about an
ice cream cone: What other products share similar characteristics, and which would you
consider as alternatives to eating a cone?
These questions may be more complex than they first appear. At one level, a cone is
similar to an apple because you could eat both as a dessert. At another level, a cone is sim
ilar to a piece of pie because you could eat either for dessert and both are fattening. At still
another level, a cone is similar to an ice cream sundae—you could eat either for dessert,
both are made of ice cream, and both are fattening. Figure 8.7 depicts these three levels.
It's easy to see that the foods a person associates with the category "fattening des
sert" influence his or her decision about what to eat after dinner. The middle level, or
basic level category, is typically the most useful for classifying products. At this level the
items we group together tend to have a lot in common with each other, but still permit us
to consider a broad enough range of alternatives. The broader superordinate category is
more abstract, whereas the more specific subordinate category often includes individual
brands.59 Of course, not all items fit equally well into a category. Apple pie is a better ex
ample of the subordinate category “pie" than is rhubarb pie, even though both are types
of pies. This is because it's more prototypical, and most people would think of apple as a
pie flavor before they thought of rhubarb. In contrast, true pie experts probably know a
lot about both typical and atypical category examples.60

Strategic Implications of Product Categorization

The way we categorize products has a lot of strategic implications. That's because this
process affects which products consumers will compare to our product and also the cri
teria they'll use to decide if they like us or the other guys.

Position a Product. The success of a positioning strategy hinges on the marketer's ability
to convince the consumer to consider its product within a given category. For example,
the orange juice industry tried to reposition orange juice as a drink people can enjoy all
day long ("It's not just for breakfast anymore"). However, soft-drink companies attempt
the opposite when they portray sodas as suitable for breakfast consumption. They are
trying to make their way into consumers’ “breakfast drink" category, along with orange
juice, grapefruit juice, and coffee. Of course, this strategy can backfire, as Pepsi-Cola

------- Dessert ---------

SUPERORDINATE LEVEL

Figure 8.7 LEVELS OF ABSTRACTION

IN DESSERT CATEGORIES
 CHAPTER 8 Decision Making 341

discovered when it introduced Pepsi A.M and positioned it as a coffee substitute. The
company did such a good job of categorizing the drink as a morning beverage that cus
tomers wouldn't drink it at any other time, and the product failed.61

Identify Competitors. At the abs act, superordinate level, many different product forms
compete for membership. The category "entertainment" might comprise both bowling
and the ballet, but not many people would substitute one of these activities for the other
Products and services that on the surface are quite different, however, actually compete
with cach other at a broad level for consumers' discretionary dollars. Although bowling
or ballet may not be a likely tradeoff for many people, a symphony might try to lure away
season ticket holders to the ballet by positioning itself as an equivalent member of the
superordinate category "cultural event."62
We're often faced with choices between noncomparable categories, where we can't
directly relate the attributes in one to those in another (the old problem of comparing
apples and oranges). When we can create an overlapping category that encompasses
both items (e.g., entertainment, value, usefulness) and then rate each alternative in terms
of that superordinate category comparison, the process is easier.63

Create an Exemplar Product. As we saw with the case of apple pie versus rhubarb pie, if
a product is a really good example of a category it is more familiar to consumers and they
more easily recognize and recall it.64 The characteristics of category exem plars tend to
exert a disproportionate influence on how people think of the category in general 65 In a
sense, brands we strongly associate with a category get to "call the shots”: They define the
criteria we use to evaluate all category members.
Being a bit less than prototypical is not necessarily a bad thing, however. Products
that are moderately unusual within their product category may stimulate more informa
tion processing and positive evaluations because they are neither so familiar that we will
take them for granted nor so different that we won't consider them at all.66 A brand that
is strongly discrepant (such as Zima, a clear malt beverage) may occupy a unique niche
position, whereas those that are somewhat different (e.g., local microbrews) remain in a
distinct position within the general category.67

Locate Products in a store. Product categorization also can affect consumers' expecta
tions regarding the places where they can locate a desired product. If products do not
clearly fit into categories (e.g., is a rug furniture?), this may diminish our ability to find
them or figure out what they’re supposed to be once we do. For instance, a frozen dog
food that pet owners had to thaw and cook before they served it to Fido failed in the mar
ket, partly because people could not adapt to the idea of buying dog food in the "frozen
foods for people" section of their grocery stores.

Product Choice:
How Do We Select from the Alternatives?
Once we assemble and evaluate the relevant options in a category, eventually we have
to choose one.68 Recall that the decision rules that guide our choices range from very
simple and quick strategies to complicated processes that require a lot of attention and
cognitive processing.69 Our job isn't getting any easier as companies overwhelm us with
more and more features. We deal with 50-button remote controls, digital cameras with
hundreds of mysterious features and book-length manuals, and cars with dashboard
systems worthy of the space shuttle. Experts call this spiral of complexity feature creep.
As evidence that the proliferation of gizmos is counterproductive, Philips Electronics
found that at least half of the products buyers return have nothing wrong with them —
consumers simply couldn't figure out how to use them! What's worse, on average the
buyer spent only 20 minutes trying to figure out how to use the product and then gave up.
Why don't companies avoid this problem? One reason is that we often assume the
more features the better. It's only when we get the product home that we realize the virtue
 342 SECTION 3 Consum ers as Decision Makers

of simplicity. In one study, consumers chose among three models of a digital device that
varied in terms of how complex each was. More than 60 percent chose the one with the
most features. Then, when the participants got the chance to choose from up to 25 fea
tures to customize their product, the average person chose 20 of these add-ons. But when
they actually used the devices, it turns out that the large number of options only frustrated
them; they ended up being much happier with the simpler product. As the saying goes,
"Be careful what you wish for___”70

Evaluative Criteria
When Richard looked at different television sets, he focused on one or two product fea
tures and completely ignored several others. He narrowed down his choices as he only
considered two specific brand names, and from the Prime Wave and Precision models,
he chose one that featured stereo capability.
Evaluative criteria are the dimensions we use to judge the merits of competing op
tions. When he compared alternative products, Richard could have chosen from among
many criteria that ranged from very functional attributes ("Does this TV come with re
mote control?") to experiential ones ("Does this TV's sound reproduction make me imag
ine I'm in a concert hall?").
Another important point is that criteria on which products differ from one another
carry more weight in the decision process than do those where the alternatives are simi
lar. If all brands a person considers rate equally well on one attribute (e.g., if all TVs come
with remote control), Richard needs to find other reasons to choose one over another. De
terminant attributes are the features we actually use to differentiate among our choices.
Marketers often educate consumers about which criteria they should use as determi
nant attributes. For example, consumer research from Church & Dwight indicated that
many consumers view the use of natural ingredients as a determinant attribute. As a re
sult, the company promoted its toothpaste made from baking soda, which the company
already manufactured for Church & Dwight's Arm & Hammer brand.71
Sometimes a company actually invents a determinant attribute: Pepsi-Cola accom
plished this when it stamped freshness dates on soda cans. It spent about $25 million on
an advertising and promotional campaign to convince consumers that there's nothing
quite as horrible as a stale can of soda—even though people in the industry estimate
that drinkers consume 98 percent of all cans well before this could be a problem. Six
months after it introduced the campaign, lo and behold, an independent survey found

This Indonesian ad shows us one of

bubblegum’s determinant attributes.
Source: Courtesy of draft FCB Jak arta Indonesia.
 CHAPTER 8 Decision M aking 343

that 61 percent of respondents felt that freshness dating is an important attribute for a soft
drink!72 To effectively recommend a new decision criterion, a marketer should convey
three pieces of information:73
Product labels assist us
1 It should point out that there are significant differences among brands on the with problem solving,
attribute. but some are more use
2 It should supply the consumer with a decision-making rule, such as i f . .. (deciding ful than others. Here are
among competing brands), then . . . (use the attribute as a criterion). some examples of the not-so-helpful variety:74
3 It should convey a rule that is consistent with how the person made the decision on
• On a Conair Pro Style 1600 hair dryer:
prior occasions. Otherwise, she is likely to ignore the recommendation because it “WARNING: Do not use in shower. Never
requires too much mental work. use while sleeping.”
• Instructions for folding up a portable
Neuromarketing: How Your Brain Reacts to Alternatives baby carriage: “Step 1: Remove baby.”
Is there a "buy button" in your brain? Some corporations, including Google, CBS, Disney, • A rest stop on a Wisconsin highway: “Do
and Frito-Lay, have teamed up with neuroscientists to find out.75 Neurom arketing uses not eat urinal cakes.”
functional magnetic resonance imaging (or fMRI), a brain-scanning device that tracks • On a bag of Fritos: “You could be a win
blood flow as we perform mental tasks. In recent years, researchers have discovered that ner! No purchase necessary. Details
regions in the brain, such as the amygdala, the hippocampus, and the hypothalamus, are inside.”
• On some Swanson frozen dinners: “Serv
dynamic switchboards that blend memory, emotions, and biochem ical triggers. These
ing suggestion: Defrost.”
interconnected neurons shape the ways in which fear, panic, exhilaration, and social
• On Tes.co’s Tiramisu dessert (printed
pressure influence our choices.
on bottom of box): “Do not turn upside
Scientists know that specific regions of the brain light up in these scans to show in down.”
creased blood flow when a person recognizes a face, hears a song, makes a decision, or • On Marks & Spencer bread pudding:
senses deception. Now they hope to harness this technology to measure consumers' reac “Product will be hot after heating.”
tions to movie trailers, automobiles, the appeal of a pretty face, and even their loyalty to • On packaging for a Rowenta iron: “Do not
specific brands. British researchers recorded brain activity as shoppers toured a virtual store. iron cic thes on body.”
They claim they identified the neural region that becomes active when a shopper decides • On Nytol sleeping aid: “Warning: May
which product to pluck from a supermarket shelf. DaimlerChrysler took brain scans of men cause drowsiness.”
as they looked at photos of cars and confirmed that sports cars activated their reward centers.
The company's scientists found that the most popular vehicles—the Porsche- and Ferrari-
style sports cars—triggered activity in a section of the brain they call the fusiform fa ce area,
which governs facial recognition. A psychiatrist who ran the study commented, "They were
reminded of faces when they looked at the cars. The lights of the cars look a little like eyes."
A study that took brain scans of people as they drank competing soft-drink brands
illustrates how loyalty to a brand affects our reactions, even at a very basic, physiological
level. When the researchers monitored brain scans of 67 people who took a blind taste
test of Coca-Cola and Pepsi, each soft drink lit up the brain's reward system, and the
participants were evenly split as to which drink they preferred—even though three out
of four participants said they preferred Coke. When told they were drinking Coke, the
regions of the brain that control memory lit up, and this activation drowned out the area
that simply reacts to taste cues. In this case, Coke's strong brand identity trumped the
sensations coming from respondents' taste receptors.
In another study, researchers reported that pictures of celebrities triggered many
of the same brain circuits as did images of shoes, cars, chairs, wristwatches, sunglasses,
handbags, and water bottles. All of these objects set off a rush of activity in a part of the
cortex that neuroscientists know links to our sense of identity and social image. The sci
entists also identified types of consumers based on their responses. At one extreme were
people whose brains responded intensely to "cool" products and celebrities with bursts of
activity but who didn't respond at all to "uncool" images. They dubbed these participants
"cool fools" who are likely to be impulsive or compulsive shoppers. At the other extreme
were people whose brains reacted only to the unstylish items; this pattern fits well with
people who tend to be anxious, apprehensive, or neurotic.
Many researchers remain skeptical about how helpful this technology will be for con
sumer research. If indeed researchers can reliably track consumers' brand preferences by
seeing how their brains react, there may be many interesting potential opportunities for new
research techniques that rely on what we (or at least our brains) do rather than what we say.
344 SECTION 3 Consum ers as Decision Makers

OBJECTIVE 4 Cybermediaries
Our access to online As anyone who's ever typed a phrase such as "home theaters"
sources changes the way into Google or another search engine knows, the Web deliv-
we decide what to buy. ers enormous amounts of product and retailer information in
----------------------------- seconds. In fact (recall our earlier discussion of the problem of
hyperchoice), the biggest problem Web surfers face these days is to narrow down their
choices, not to beef them up. In cyberspace, simplification is key.
With the tremendous number of Web sites available and the huge number of people
surfing the Web each day, how can people organize information and decide where to
click? A cybermediary often is the answer. This is an intermediary that helps to filter and
organize online market information so that customers can identify and evaluate alterna
tives more efficiently.76 Many consumers regularly link to comparison-shopping sites,
such as Bizrate.com or Pricegrabber.com, for example, that list many online retailers that
sell a given item along with the price each charges.77
Cybermediaries take different forms:78

• Directories and portals, such as Yahoo! or The Knot, are general services that tie to
gether a large variety of different sites.
• Forums, f a n clubs, and user groups offer product-related discussions to help custom
ers sift through options (more on these in Chapter 10). It's clear that customer product
reviews are a key driver of satisfaction and loyalty. In one large survey, about half of
the respondents who bought an item from a major Web site remembered seeing cus
tomer product reviews. This group's satisfaction with the online shopping experience
was 5 percent higher than for shoppers who didn't recall customer reviews. '9Another
advantage is that consumers get to experience a much wider array of options—and
at the same time products such as movies, books, and CDs that aren't "blockbusters"
are more likely to sell. At Netflix, the online DVD rental company, for example, fel
low subscribers recommend about two-thirds of the films that people order. In fact,
between 70 and 80 percent of Netflix rentals come from the company's back catalog
of 38,000 films rather than recent releases.80

This aspect of online customer review is one important factor that's fueling a new
way of thinking, which one writer calls the long tail.81 The basic idea is that we no longer
need rely solely on big hits (such as blockbuster movies or best-selling books) to find prof
its. Companies can also make money if they sell small amounts of items that only a few
people want— if they sell enough different items. For example, Amazon.com maintains
an inventory of 3.7 million books, compared to the 100,000 or so you'll find in a Barnes
& Noble retail store. Most of these will sell only a few thousand copies (if that), but the
3.6 million books that Barnes & Noble doesn’t carry make up a quarter of Amazon's reve
nues! Other examples of the long tail include successful microbreweries and TV networks
that make money on reruns of old shows on channels such as the Game Show Network.
Intelligent agents are sophisticated software programs that use collaborativefiltering
technologies to learn from past user behavior in order to recommend new purchases.82
When you let Amazon.com suggest a new book, the site uses an intelligent agent to pro
pose novels based on what you and others like you have bought in the past. Collaborative
filtering is still in its infancy. In the next few years, expect to see many new Web-based
methods to simplify the consumer decision-making process. (Now if only someone could
come up with an easier way to pay for all the great stuff you find courtesy of shopping bots!)
Researchers work hard to understand how consumers find information online, and
in particular how they react to and integrate recommendations received from different
kinds of online agents into their own product choices. An electronic recommendation
agent is a software tool that tries to understand a human decision maker's multiattribute
preferences for a product category as it asks the user to com municate his preferences.
Based on that data, the software then recommends a list of alternatives sorted by the
degree to which they fit these criteria. These agents do appear to influence consumers'
decision making, though some evidence indicates that they're more effective when they
 CHAPTER 8 Decision Making 345

recommend a product based on utilitarian attributes (functionality such as nutritional

value) rather than hedonic attributes (such as design or taste).83
Although engineers continually improve the ability of electronic recom m enda
tion agents to suggest new things we might like, we still rely on other people to guide
our search. About 80 percent of online shoppers rely on customer reviews before they
buy. We call the people who supply these reviews brand advocates. Yahoo! estimates
that 40 percent of people who spend time online are advocates and that they influence
purchases two to one over nonadvocates. Marketers who adjust their strategies to ac
knowledge this impact find it's worth their while. For example, PETCO saw a 500 percent
increase in its click-through rate when it included consumers' reviews in its online ads.84
The huge growth in demand for user reviews in turn fuels new opinion-based sites,
such as Yelp for local businesses, TripAdvisor for travel, and Urbanspoon for restaurants.
Yelp, for example, offers more than 4 million reviews of everything from corner cafés to
dog groomers. People who take the time to post to these sites don't do it for money, but
they do generate an incom e in the form of props for good recommendations. Analysts
refer to this reward system as the reputation economy: Many thousands of consumers
devote significant time to editing Wikipedia entries, serving as brand advocates, or up
loading clips to YouTube simply because they enjoy the process and want to boost their
reputation as knowledgeable advisors.85

OBJECTIVE 5 Heuristics: Mental Shortcuts

We often fall back on
well-learned “rules- Do we actually perform complex mental calculations every time we
of-thumb” to make make a purchase decision? Get a life! Remember our earlier discus
decisions. sion about satisficing and the many times we "settle" for a choice
that may not be perfect, but will be adequate? When we don't rely
on a Web site to steer us to the right place, we often use other deci
sion rules to simplify our choices. For example, Richard made certain assumptions instead of
engaging in prolonged information search. In particular, he assumed that the selection at Zany
Zack's was more than sufficient, so he did not bother to shop at any of Zack's competitors.86
Especially when limited problem solving occurs prior to making a choice, we often
fall back on heuristics, or mental rules-of-thumb, to make a speedy decision. These rules
range from the very general (“higher-priced products are higher-quality products" or "buy
the same brand I bought last time”) to the very specific ("buy Domino, the brand of sugar
my mother always bought").87 Sometimes these shortcuts may not be in our best interests.
A car shopper who personally knows one or two people who have had problems with a
particular vehicle, for example, might assume that he would have similar trouble with it
rather than taking the time to find out that it actually has an excellent repair record.88

How Do We Rely on Product Signals?

One shortcut we often use is to infer hidden dimensions of products from attributes we
observe. In these cases the visible element is a product signal that communicates some un
derlying quality. This explains why someone who tries to sell a used car makes sure the car's
exterior is clean and shiny: Potential buyers often judge the vehicle's mechanical condition
by its appearance, even though this means they may drive away in a clean, shiny clunker.89
When we only have incomplete product information, we often base our judgments
on our beliefs about covariation—the associations we have among events that may or
may not actually influence one another.90 For example, a shopper may judge product
quality by the length of time a manufacturer has been in business. Other signals or attri
butes consumers tend to believe coexist with good or bad products include well-known
brand names, country of origin, price, and the retail outlets that carry the product. Un
fortunately, many of us estimate covariation quite poorly, and our erroneous beliefs per
sist despite evidence to the contrary. In a process similar to the consistency principle
discussed in Chapter 7, we tend to see what we're looking for. In other words, we'll look
for product information that confirms our guesses and ignore or explain away informa
tion that contradicts what we already think.91 For example, in one study, people who saw
346 SECTION 3 Consum ers as Decision Makers

Consumers often simplify choices when

they use heuristics such as automatically
choosing a favorite color or brand.
Source: Courtesy of ¡Party Retail Store Corp.

w w w.iparty.com > birthdays > basics > pink > cups/plates/napkins/favors > order

i w ant, i click. ip a r t y .c o m
.» ) k eyword ip o rty

a snack food package with a larger number of individual cookies assumed that the box
actually included more product units.92

Market Beliefs: Is It Better if I Pay More for It?

We constantly form assumptions about companies, products, and stores. These m arket
beliefs then becom e shortcuts that guide our decisions—as our discussion of green-
washing indicates, these beliefs are not necessarily accurate.93 Recall that Richard chose
to shop at a large "electronics warehouse store" because he assum ed that the selec
tion would be better there than at a specialty store. Table 8.2 lists some market beliefs
researchers have identified; how many do you share?
Do higher prices mean higher quality? The link we assume between price and qual
ity is one of the most pervasive market beliefs.94 In fact, novice consumers may consider
price the only relevant product attribute. Experts also consider this information, although
they tend to use price for its informational value when they evaluate products (e.g., vir
gin wool) that they know vary widely in quality. When this quality level is more standard
 CHAPTER 8 Decision Making 347

Common Market Beliefs

Brand All brands are basically the same.

Generic products are just name brands sold under a different label at a lower price.
The best brands are the ones that are purchased the most.
When in doubt, a national brand is always a safe bet.
Store Specialty stores are great places to familiarize yourself with the best brands; b it once you figure out what you
want, it’s cheaper to buy it at a discount outlet.
A store’s character is reflected in its window displays.
Salespeople in specialty stores are more knowledgeable than other sales personnel.
Larger stores offer better prices than small stores.
Locally owned stores give the best service.
A store that offers a good value on one of its products probably offers good values on all of its items.
Credit and return policies are most lenient at large department stores.
Stores that have just opened usually charge attractive prices.
Prices / Discounts / Sales Sales are typically run to get rid of slow-moving merchandise.
Stores that are constantly having sales don’t really save you money.
Within a given store, higher prices generally indicate higher quality.
Advertising and Sales Promotion “Hard-sell” advertising is associated with low-quality products.
Items tied to “giveaways” are not a good value (even with the freebie).
Coupons represent real savings for customers because they are not offered by the store.
When you buy heavily advertised products, you are paying for the label, not for iigher quality.
Product / Packaging Largest-sized containers are almost always cheaper per unit than smaller sizes.
New products are more expensive when they’re first introduced; prices tend to s ettle down as time goes by.
When you are not sure what you need in a product, it’s a good idea to invest in the extra features, because
you’ll probably wish you had them later.
In general, synthetic goods are lower in quality than goods made of naturals materials.
It’s advisable to stay away from products when they are new to the market; it usually takes the manufacturer
a little time to work the bugs out.

Source: Adapted from Calvin P. Duncan, “Consum er Market Beliefs: A Review of the Literature and an Agenda for Future Research, " in Marvin E. Goldberg. Gerald Gorn, and
Richard W. Poliay eds., Advances in Consumer Research 17 (Provo, UT: Association for Consum er Research, 1990):729-35.

or strictly regulated (e.g., Harris Tweed sport coats), experts do not weigh price in their
decisions. For the most part, this belief is justified; you do tend to get what you pay for.
However, let the buyer beware: The price-quality relationship is not always justified.95

Country of Origin as a Product Signal

Does a shrimp have a personality? As cheap foreign imports flood the market, U.S.
shrimpers hope they do. They know that consum ers prefer coffee from exotic places
such as Kenya and salmon from Alaska, so they hope to persuade consumers to pre
fer American shrimp. At the Lark restaurant in Seattle, diners can read on the menu
whether the prawns come from Georgia, Florida, or Alaska. Other places get even more
specific about the home address of their crustaceans. The Silverado Resort and Spa in
Napa, California, serves "local West Texas white shrimp."96
A product's “address" matters. We Americans like to buy Italian shoes, Japanese cars,
clothing imported from Taiwan, and microwave ovens built in South Korea. Country
of origin often is a determinant attribute in the decision-making process. Consumers
strongly associate certain items with specific countries, and products from those coun
tries often attempt to benefit from these linkages. The consumer's own expertise with the
product category moderates the effects of this attribute. When other information is avail
able, experts tend to ignore country-of-origin information, whereas novices continue to
rely on it. However, when other information is unavailable or ambiguous, both experts
and novices will rely on a product's birthplace to make a decision.
Swadeshi describes an Indian nationalist movement that started in the 19th century
in reaction to the British decision to divide the country into separate provinces. Adherents
348 SECTION 3 Consum ers as Decision Makers

A Dutch shoe ad reminds us that a product’s

address matters.
Source: Courtesy of Grey / Copenhagen.

boycott multinational brands like Coca-Cola and express their ideology as they buy products
made in India. Men buy Godrej or Emani shaving creams instead of Old Spice or Gillette;
women make a point of shampooing with Lakme, Nirma, or Velvet instead of Western brands
that are sold in India, such as Halo, All Clear, Sunsilk, Head & Shoulders, or Pantene.97
Ethnocentrism is the tendency to prefer products or people of one's own culture to those of
other countries. Ethnocentric consumers are likely to feel it is wrong to buy products made
elsewhere, particularly because this may have a negative effect on the domestic economy.
Marketing campaigns that stress the desirability of "buying American" obviously ap
peal to ethnocentric consumers. The Consumer Ethnocentric Scale (CETSCALE) m ea
sures this trait. Ethnocentric consumers agree with statements such as the following:98

• Purchasing foreign-made products is un-American.

• Curbs should be put on all imports.
• American consumers who purchase products made in other countries are respon
sible for putting their fellow Americans out of work.99

Do We Choose Familiar Brand Names

Because of Loyalty or Habit?
When you fall in love with a brand, it may be your favorite for a lifetime. In a study the Bos
ton Consulting Group conducted of the market leaders in 30 product categories, 27 of the
 CHAPTER 8 Decision Making 349

brands that were number one in 1930 (such as Ivory Soap and Campbell's Soup) still were at
the top more than 50 years later.100 Clearly, "choose a well-known brand name" is a power
ful heuristic. As this study demonstrates, some brands in a sense are well-known because
they are well-known—we assume that if so many people choose a product, it must be good.
Indeed, our tendency to prefer a number-one brand to the competition is so strong
that it seems to mimic a pattern scientists find in other domains ranging from earth
quakes to linguistics. Z ip f s Law describes this pattern. In the 1930s, a linguist named
George Kingsley Zipf found that the—the most-used English word—occurs about twice as
often as o/(second place), about three times as often as a nd (third), and so on. Since then,
scientists have found similar relationships between the size and frequency of earthquakes
and a variety of other natural and artificial phenomena.
A marketing researcher decided to apply Zipf's Law to consumer behavior. His
firm asked Australian consumers to identify the brands of toilet paper and instant cof
fee they use and to rank them in order of preference. As the model predicted, people
spend roughly twice as much of their toilet paper budget on the top choice than on the
second-ranked brand, about twice as much on the number-two brand as on the third-
ranked brand, and about twice as much on the number-three brand as on the number-
four brand. One ramification is that a brand that moves from number two to number
one in a category will see a much greater jump in sales than will, say, a brand that moves
from number four to number three. Brands that dominate their markets are as much as
50 percent more profitable than their nearest competitors.101

IF ITV NOT
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WWW.R££FA/0f££PK
Marketers like this Danish restaurant often
rely on consumers’ expectations based on
4, Jembanegade • 30 yards from Town Hail country-of-origin cues.
Source: Couitesy of Reef ‘N Beef / Saatchi.
350 SECTION 3 Consum ers as Decision Makers

Inertia: The Lazy Customer

Many people tend to buy the same brand just about every time they go to the store. Often
this is because of inertia; we buy a brand out of habit merely because it requires less effort
(see Chapter 4). If another product comes along that is cheaper (or if the original product
is out of stock), we won't hesitate to change our minds. A competitor who tries to encour
age this switch often can do so rather easily because the shopper won't hesitate to jump
to the new brand if it offers the right incentive. Indeed, one industry observer labels this
variety-seeking consumer a brand slut! A bit harsh, but we get the point.102

Brand Loyalty: A “ Friend,” Tried-and-True

This kind of "promiscuity" will not occur if true brand loyalty exists. In contrast to inertia,
brand loyalty describes repeat purchasing behavior that reflects a conscious decision to
continue buying the same brand.103 This definition implies that the consumer not only
buys the brand on a regular basis, but also has a strong positive attitude toward it rather
than simply buying it out of habit. In fact, we often find that a brand-loyal consumer
has more than simply a positive attitude; frequently she is passionate about the product.
Because of these emotional bonds, "true-blue" users react more vehemently when a com
pany alters, redesigns, or (God forbid) eliminates a favorite brand.104

OBJECTIVE 6 Decision Rules We Use When We Care

Consumers rely on We've seen that we use different rules when we choose among
different decision rulescompeting products that depend on the complexity of the deci
when they evaluate sion and how important the choice is to us. Sometimes we use
competing options. a simple heuristic, but at other times we carefully weigh alter-
-----------------------------
natives. We describe the processes we use when we give more
thought to these decisions as we divide the rules we use into two
categories: compensatory and noncompensatory. To aid in the discussion of some of these
rules, Table 8.3 summarizes the attributes of the TV sets that Richard considered. Now,
let's see how some of these rules result in different brand choices.
We use noncompensatory decision rules when we feel that a product with a low
standing on one attribute can't compensate for this flaw even if it performs better on
another attribute. In other words, we simply eliminate all options that do not meet some
basic standards. A consumer like Richard who uses the decision rule, "Only buy well-
known brand names," would not consider a new brand, even if it were equal or superior
to existing ones. When people are less familiar with a product category or are not very
motivated to process complex information, they tend to use simple, noncompensatory
rules such as the ones we summarize next.105

The Lexicographic Rule. When a person uses the lexicographic rule, he selects the brand
that is the best on the most important attribute. If he feels that two or more brands are

TABLE 8.3 Hypothetical Alternatives for a TV Set

Brand Ratings

Importance
Attribute Ranking Prime Wave Precision Kamashita

Size of screen 1 Excellent Excellent Excellent

Stereo broadcast capability 2 Poor Excellent Good

Brand reputation 3 Excellent Excellent Poor

Onscreen programming 4 Excellent Poor Poor

Cable-ready capability 5 Good Good Good

Sleep timer 6 Excellent Poor Good

 CHAPTER 8 Decision Making 351

equally good on that attribute, he then compares them on the second most important at
tribute. This selection process goes on until the tie is broken. In Richard's case, because
both the Prime Wave and Precision models were tied on his most important attribute (a
60-inch screen), he chose the Precision because of its rating on his second most impor
tant attribute: its stereo capability.

The Elimination-by-Aspects Rule. Using the elimination-by-aspects rule, the buyer also
evaluates brands on the most important attribute. In this case, though, he imposes spe
cific cutoffs. For example, if Richard had been more interested in having a sleep timer
on his TV (i.e., if it had a higher importance ranking), he might have stipulated that his
choice "must have a sleep timer." Because the Prime Wave model had one and the Preci
sion did not, he would have chosen the Prime Wave.

The Conjunctive Rule. Whereas the two former rules involve processing by attribute, the
conjunctive rule entails processing by brand. As with the elimination-by-aspects proce
dure, the decision maker establishes cutoffs for each attribute. He chooses a brand if it
meets all the cutoffs, but rejects a brand that fails to meet any one cutoff. If none of the
brands meet all the cutoffs, he may delay the choice, change the decision rule, or modify
the cutoffs he chooses to apply.
If Richard stipulated that all attributes had to be rated "good" or better, he would not
have been able to choose any of the available options. He might then have modified his
decision rule, conceding that it was not possible to attain these high standards in his price
range. In this case, perhaps Richard could decide that he could live without on-screen
programming, so he would reconsider the Precision model.

Compensatory Decision Rules

Unlike noncompensatory rules, com pensatory decision rules give a product a chance
to make up for its shortcomings. Consumers who employ these rules tend to be more in
volved in the purchase, so they're willing to exert the effort to consider the entire picture
in a more exacting way.106
If we're willing to allow good and bad product qualities to cancel each other out, we
arrive at a very different choice. For example, if Richard were not concerned about having
stereo reception, he might have chosen the Prime Wave model. But because this brand
doesn't feature this highly ranked attribute, it doesn't stand a chance when he uses a
noncompensatory rule.
Researchers identify two basic types of compensatory rules. A person uses a simple
additive rule if he merely chooses the alternative that has the largest number of positive
attributes. This is most likely to occur when his ability or motivation to process informa
tion is limited. One drawback to this approach for the consumer is that some of these
attributes may not be very meaningful or important. An ad that presents a long list of
product benefits may be persuasive, despite the fact that many of the benefits it names
are actually standard within the product class.
The weighted additive rule is a more complex version.107 When he uses this rule, the
consumer also takes into account the relative importance of positively rated attributes,
essentially multiplying brand ratings by importance weights. If this process sounds fa
miliar, it should. The calculation process strongly resembles the multiattribute attitude
model described in Chapter 7.

CHAPTER SUMMARY
Now that you have finished reading this chapter you should We alm ost constantly need to make decisions about
understand why: products. Some of these decisions are very important and
entail great effort, whereas we make others on a virtu
1. Consumer decision making is a central part of consumer ally automatic basis. The decision-making task is further
behavior, but the way we evaluate and choose products complicated because of the sheer number of decisions we
(and the amount of thought we put into these choices) need to make in a marketplace environment character
varies widely, depending on such dimensions as the ized by consumer hyperchoice.
degree of novelty or risk related to the decision.
 352 SECTION 3 Consum ers as Decision Makers

Perspectives on decision making range from a focus Principles of mental accounting demonstrate that the way
on habits that people develop over time to novel situations a problem is posed (called fra m in g) and whether it is put
involving a great deal of risk in which consumers must in terms of gains or losses influences what we decide.
carefully collect and analyze information before making
a choice. Many of our decisions are highly automated; we 4. Our access to online sources is changing the way we
make them largely by habit. This trend is accelerating as decide what to buy.
marketers begin to introduce smart products that enable
The World Wide Web has changed the way many of us
silent commerce, where the products literally make their
search for information. Today, our problem is more likely
own purchase decisions (e.g., a malfunctioning appliance
to weed out excess detail than to search for more infor
that contacts the repair person directly).
mation. Comparative search sites and intelligent agents
help to filter and guide the search process. We may rely
2. A decision is actually composed of a series of stages
on cybermediaries, such as Web portals, to sort through
tha t results in the selection of one product over
massive amounts of information as a way to simplify the
competing options.
decision-making process.
A typical decision process involves several steps. The first
is problem recognition, when we realize we must take 5. We often fall back on well-learned “ rules-of-thumb” to
some action. This recognition may occur because a cur make decisions.
rent possession malfunctions or perhaps because we have
Very often, we use heuristics, or mental rules-of-thumb,
a desire for something new.
to simplify decision making. In particular, we develop
Once the consumer recognizes a problem and sees it
many market beliefs over time. One of the most common
as sufficiently important to warrant some action, he begins
beliefs is that we can determine quality by looking at the
the process of information search. This search may range
price. Other heuristics rely on well-known brand names
from doing a simple scan of his memory to determine what
or a product's country of origin as signals of product qual
he's done before to resolve the same problem to extensive
ity. When we consistently purchase a brand over time, this
fieldwork during which he consults a variety of sources to
pattern may be the result of true brand loyalty or simply
amass as much information as possible. In many cases,
inertia because it's the easiest thing to do.
people engage in surprisingly little search. Instead, they
rely on various mental shortcuts, such as brand names or 6. Consumers re ly on different decision rules when
price, or they may simply imitate others' choices. evaluating competing options.
In the evaluation-of-alternatives stage, the product al
ternatives a person considers constitute his evoked set. Mem When the consumer eventually must make a product
bers of the evoked set usually share some characteristics; choice from among alternatives, he uses one of several
we categorize them similarly. The way the person mentally decision rules. Noncompensatory rules eliminate alterna
groups products influences which alternatives she will con tives that are deficient on any of the criteria we've chosen.
sider, and usually we associate some brands more strongly Compensatory rules, which we are more likely to apply in
with these categories (i.e., they are more prototypical). high-involvement situations, allow us to consider each
alternative's good and bad points more carefully to arrive
3. Decision making is not always rational. at the overall best choice.

R esearch in the field of behavioral econom ics illus

trates that decision making is not always strictly rational.

KEY TERMS
anchoring, 331 country of origin, 347 game platform, 323
behavioral econom ics, 330 cybermediary, 344 genre, 324
behavioral influence perspective, 322 determinant attributes, 342 habitual decision making, 325
blissful ignorance effect, 335 electronic recommendation agent, 344 heuristics, 345
bounded rationality, 328 ethnocentrism, 348 hyperopia, 332
brand advocates, 345 evaluative criteria, 342 incidental brand exposure, 333
brand loyalty, 350 evoked set, 337 inertia, 350
category exemplars, 341 experiential perspective, 322 information search, 327
cognitive processing style, 322 extended problem solving, 323 intelligent agents, 344
compensatory decision rules, 351 feature creep, 341 knowledge structure, 340
consideration set, 337 framing, 330 limited problem solving, 324
consumer hyperchoice, 320 game-based marketing, 324 long tail, 344
 CHAPTER 8 Decision Making 353

low-literate consumer, 327 neuromarketing, 343 reputation economy, 345

market beliefs, 346 noncompensatory decision rules, 350 satisficing, 328
maximizing, 328 perceived risk, 336 search engines, 328
mental accounting, 330 problem recognition, 326 Sisyphus Effect, 329
milieu, 323 product signal, 345 social game, 323
MMORPGs (massively multiplayer prospect theory, 332 variety amnesia, 330
online role playing games), 324 purchase momentum, 322 variety seeking, 330
mode, 323 rational perspective, 321 Zipf s Law, 349

REVIEW
1 Why do we say that "mindless" decision making can actually be 9 List three types of perceived risk, and give an example of
more efficient than devoting a lot of thought to what we buy? each.
2 List the steps in the model of rational decision making. 10 "Marketers need to be extra sure their product works as
3 What is purchase momentum, and how does it relate (or promised when they first introduce it." How does this state
not) to the model of rational decision making? ment relate to what we know about consum ers' evoked
4 What is the difference between the behavioral influence sets?
and experiential perspectives on decision making? Give 11 Describe the difference between a superordinate category,
an example of the type of purchase that each perspective a basic level category, and a subordinate category.
would most likely explain. 12 What is an example of an exemplar product?
5 Name two ways in which a consumer problem arises. 13 List three product attributes that consumers use as product
6 Give an example of the sunk-cost fallacy. quality signals and provide an example of each.
7 What is prospect theory? Does it support the argument that 14 How does a brand name work as a heuristic?
we are rational decision makers? 15 Describe the difference between inertia and brand loyalty.
8 Describe the relationship between a consumer's level of 16 What is the difference between a noncompensatory and a
expertise and how much she is likely to search for infor compensatory decision rule? (jive one example of each.
mation about a product.

CONSUMER BEHAVIOR CHALLENGE

DISCUSS
1 This chapter argues that for many of today's consumers, 6 What is the future of social gaming? How do you evaluate
it's a bigger problem to have too many choices than to not the potential of these activities for marketing activities?
have enough choices. Do you agree? Is it possible to have 7 Technology has the potential i:o make our lives easier as it
too much of a good thing? reduces the amount of clutter we need to work through to
2 Commercial Alert, a consumer group, is highly critical of access the information on the Internet that really interests
neuromarketing. The group's executive director wrote, us. However, perhaps intelligent agents that make recom
"What would happen in this country if corporate market mendations based only on what we and others like us have
ers and political consultants could literally peer inside our chosen in the past limit us, in that they reduce the chance
brains and chart the neural activity that leads to our selec that we will stumble on something (e.g., a book on a topic
tions in the supermarket and voting booth? What if they we've never heard of or a music group that's different from
then could trigger this neural activity by various means, so the style we usually listen to) through serendipity. Will the
as to modify our behavior to serve their own ends?"108What proliferation of "shopping bots" make our lives too pre
do you think? Is neuromarketing dangerous? dictable by only giving us more of the same? If so, is this a
3 If people are not always rational decision makers, is it worth problem?
the effort to study how they make purchasing decisions? 8 It's increasingly clear that many postings on blogs and prod
What techniques might marketers employ to understand uct reviews on Web sites are fake or are posted there to ma
experiential consum ption and translate this knowledge nipulate consumers' opinions. How big a problem is this if
into marketing strategy? consumers increasingly look to consumer-generated prod
4 Why is it difficult to place a product in a consumer's evoked uct reviews to guide their purchase decisions? What steps, if
set after the person has already rejected that product? What any, can marketers take to nip this problem in the bud?
strategies might a marketer use to accomplish this goal? 9 The chapter notes that people respond to very subtle cues
5 Discuss two different noncompensatory decision rules and in the environment even when they are totally unaware
highlight the difference(s) between them. How might the use of these effects. Can or should marketers exploit these
of one rule versus another result in a different product choice? influences?
 354 SECTION 3 Consum ers as Decision Makers

APPLY
1 Find examples of electronic recommendation agents on influence. What are the major differences in emphasis
the Web. Evaluate these. Are they helpful? What charac among the three perspectives? Which is the most likely type
teristics of the sites you locate are likely to make you buy of problem-solving activity for the product you have se
products you wouldn't have bought on your own? lected? What characteristics of the product make this so?
2 In the past few years, several products made in China (in 8 Locate a person who is about to make a m ajor purchase.
cluding toothpaste and toys) have been recalled because Ask that person to make a chronological list of all the in
they are dangerous or even fatal to use. In one survey, about formation sources he or she consults before deciding what
30 percent of American respondents indicated that they to buy. How would you characterize the types of sources
have stopped purchasing some Chinese goods as a result he or she uses (i.e., internal versus external, media versus
of the recalls or that they usually don't buy products from personal, etc.)? Which sources appeared to have the most
China.109 If the Chinese government hired you as a consul impact on the person's decision?
tant to help it repair some of the damage to the reputation of 9 Perform a survey of country-of-origin stereotypes. Compile
products made there, what actions would you recommend? a list of five countries and ask people what products they as
3 Conduct a poll based on the list of market beliefs found sociate with each. What are their evaluations of the products
in Table 8.2. Do people agree with these beliefs, and how and likely attributes of these different products? The power
much do they influence people's decisions? of a country stereotype can also be demonstrated in another
4 Pepsi invented freshness dating and managed to persuade way. Prepare a brief description of a product, including a list
consumers that this was an important product attribute. of features, and ask people to rate it in terms of quality, like
Devise a similar strategy for another product category by lihood of purchase, and so on. Make several versions of the
coming up with a completely new product attribute. How description, varying only the country from which it comes.
would you communicate this attribute to your customers? Do ratings change as a function of the country of origin?
5 Define the three levels of product categorization the chap 10 Ask a friend to "talk through" the process he or she used
ter describes. Diagram these levels for a health club. to choose one brand rather than others during a recent
6 Choose a friend or parent who grocery shops on a regular purchase. Based on this description, can you identify the
basis and keep a log of his or her purchases of common decision rule that he or she most likely employed?
consumer products during the term. Can you detect any 11 Give one of the scenarios described in the section on biases
evidence of brand loyalty in any categories based on con in decision making to 10 to 20 people. How do the results
sistency of purchases? If so, talk to the person about these you obtain compare with those reported in this chapter?
purchases. Try to determine if his or her choices are based 12 Think of a product you recently shopped for online. D e
on true brand loyalty or on inertia. What techniques might scribe your search process. How did you become aware that
you use to differentiate between the two? you wanted or needed the product? How did you evaluate
7 Form a group of three. Pick a product and develop a market alternatives? Did you wind up buying online? Why or why
ing plan based on each of the three approaches to consumer not? What factors would make it more or less likely that you
decision making: rational, experiential, and behavioral would buy something online versus in a traditional store?

M yM a rk e tingLa b Now that you have completed this chapter, return to www
.pearsonglobaleditions.com / mymarketinglab to apply concepts and explore the additional study materials.

Case Study
MAC VS. PC claiming allegiance to PCs from all sorts of PC users, ranging from
celebrities to an adorable 4V2 year old. Still, it's an uphill battle:
"Hi, I'm a M a c. .. and I'm a PC." You probably know this success For a generation of consumers raised on cool products like the
ful TV campaign that features a very smart, cool Mac guy and a iPod and the iPad, it's a tough sell to shake Apple's spell. Although
nerdy PC guy. These ads for Apple's Mac laptops aimed to grab a PCs still have the majority of market share, a growing number of
big chunk of the personal computing business, especially among Macs show up on college campuses every fall.
younger users. Microsoft fired back as the company tried to sepa In the spring of 2011, Microsoft tried a new tactic: A stu
rate itself from the undesirable PC-guy image. Its first attempt; a dent who purchased a PC for $699 or more received a free Xbox.
quirky campaign featuring comedian Jerry Seinfeld and Windows He or she only needed to walk into Best Buy with a college ID or
founder Bill Gates, failed to move the sales needle. Microsoft had email address, and walk out carrying a PC along with an Xbox
more success with the “I'm a PC ads" that featured testimonials with a retail value of approximately $300. Compared to a Mac
 CHAPTER 8 Decision Making 355

that starts at $999, this bundle offered an attractive value propo from those free units through game purchases, online subscrip
sition to students who were also into gaming. tions, accessories, and loyalty to future Xbox consoles? How will
Is this a simple pricing promotion, or part of a more elaborate the new tablets that combine features of gaming consoles and
branding strategy? The Xbox represents the "fun" side of Micro laptops affect all of this?
soft's personality, so this bundle might help to reposition Microsoft
away from the awkward office-worker stereotype and closer to Ap DISCUSSION QUESTIONS
ple's cool image among members of this crucial market segment.
Microsoft is still evaluating the results of the promotion. 1 What characteristics of extended problem solving are in
Marketers continue to debate the effectiveness of "free” offers. volved in a computer purchase?
Assuming that the promotion drives short-term sales of PCs, 2 How might the free Xbox offer influence a consum er's
will it also influence long-term loyalty? What does this bun mental accounting and perceived risk?
dling mean for the Xbox, the current market leader in gaming 3 How might Apple be creating a heuristic for its consumers?
consoles within the college market? With a free Xbox as an op
tion in the marketplace, will college students be less willing to S ou rce s : "M icrosoft Announces New Back-to-School Offer for Students,"
pay $300 for a stand-alone Xbox console? Finally, the question w w w .m icro so ft.co m /p re ssp a ss/p re ss/2 0 1 1 /m a y ll/0 5 -19m spcX boxpr,
remains whether a free console is like a free cell phone from accessed July 1, 2011; Priya Raghubir, "Free Gift with Purchase: Prom ot
ing or Discounting the Brand?," J ou r n a l o f C on s u m e r Psychology 14 (2004):
your wireless company, where the revenues come from add-on 181-86; "Console and PC Games—US," Mintel Reports database (October
purchases in the form of talk minutes. Will Microsoft still profit 2010), http://academ ic.m intel.com .ezprcxy.bu.edu, accessed July 1, 2007.

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