Consumer Decision Making

By Peter, J.P., Olson, J.C.

Edited by Paul Ducham

DECISION FRAME

When faced with a choice, consumers must interpret or represent various aspects of the decision problem. This problem representation may include (1) an end goal, (2) a set of subgoals organized into a goal hierarchy, (3) relevant product knowledge, and (4) a set of simple rules or heuristics by which consumers search for, evaluate, and integrate this knowledge to make a choice. A problem representation serves as a decision frame, a perspective or frame of reference through which the decision maker views the problem and the alternatives to be evaluated.

 Often consumers’ initial problem representations are not clear or well developed (Megan’s wasn’t). Nor are they fixed. In fact, the components of a problem representation often change during the decision-making process, as in the opening example. Marketers sometimes try to influence how consumers represent or frame a purchase choice. 8 For instance, consumers might be portrayed in advertisements as representing and then trying to solve a purchase problem in a particular way. Salespeople also try to influence consumers’ problem representations by suggesting end goals (buy life insurance to assure your children’s college education), imparting product knowledge (this special flash eliminates red eyes in the pictures), or suggesting choice rules (the more expensive coat is of higher quality).

 The basic consequences, needs, or values that consumers want to achieve or satisfy are called end goals . They provide the focus for the entire problem-solving process. Some end goals represent more concrete, tangible consequences; other end goals are more abstract. For instance, a purchase decision to replace a bulb for a flashlight probably involves the simple end goal of obtaining a bulb that lights up—a simple functional consequence. Other product choices involve more abstract end goals such as desired psychosocial consequences of a product (a consumer wants to serve a wine that conveys her good taste to her guest). Finally, end goals such as instrumental and terminal values are even more abstract and general (a consumer chooses a car that makes him feel powerful or enhances his self-esteem). End goals also vary in evaluation. Some consumer decisions are oriented toward positive, desirable end goals, while others are focused on negative end goals—aversive consequences the consumer wishes to avoid.

 Some end goals (e.g., being happy) are so general that consumers cannot act on them directly. For instance, most consumers cannot specify the decision plan of specific actions that will yield the best restaurant or avoid a “lemon” of a car. When consumers try to solve problems involving abstract end goals, they break down the general goal into several more specific subgoals. The end goal and its subgoals form a goal hierarchy . Forming a goal hierarchy is analogous to decomposing a complex problem into a series of simpler subproblems, each of which is dealt with separately. For most people, buying a new car requires at least one trip to a showroom, which generates the subproblems of which dealer(s) to visit and when to go shopping. Usually the consumer can generate a solution to the overall problem by solving the simpler subproblems in order.

 Consumers’ relevant knowledge in memory about the choice domain is an important element in problem solving. Some knowledge may be acquired by interpreting information encountered in the environment during the problem-solving process. For instance, in the opening example, Megan learned a lot about cars, car dealers, and price ranges for cars. Other relevant knowledge may be activated from memory for use in integration processes. The relevance of knowledge is determined by its means–end linkages to the currently active end goal. Parts of the activated knowledge may be combined in the integration processes by which consumers evaluate alternative behaviors (form Aact ) and choose among them (form BI ). Two types of knowledge are particularly important in problem solving: choice alternatives and choice criteria.

 Choice Alternatives.  Choice alternatives are the alternative behaviors that consumers consider in the problem-solving process. For purchase decisions, the choice alternatives are the different product classes, product forms, brands, or models the consumer considers buying. For other types of decisions, the choice alternatives may be different stores to visit, times of the day or week to go shopping, or methods of payment (cash, check, or credit card). Given their limited time, energy, and cognitive capacity, consumers seldom consider every possible choice alternative. Usually only a subset of all possible alternatives, called the consideration set , is evaluated.

 Exhibit 7.3 illustrates how a manageable consideration set of brands can be constructed during the problem-solving process. Some brands in the consideration set may be activated directly from memory; this group is called the evoked set. For highly familiar decisions, consumers may not consider any brands beyond those in the evoked set. If consumers are confident they already know the important choice alternatives, they are not likely to search for additional ones. In other decisions, choice alternatives may be found through intentional search activities such as reading Consumer Reports, talking to knowledgeable friends, or finding brands while shopping. Finally, consumers may learn of still other choice alternatives through accidental exposure to information in the environment, such as overhearing a conversation about a new brand, a new store, or a sale. In the opening case, Megan learned about the car megadealer from a billboard ad, essentially by accident. However, the choice alternatives are generated, consumers form a consideration set of possible purchase options to be evaluated in the decision-making process.

 To be successful, a brand must be included in the consideration sets of at least some consumers. For example, Kali Klena, marketing manager at Kellogg, flew from Milwaukee to Chicago even though a one-way flight cost between $84 and $206 and could take as long as three hours, including check-in time and transportation to and from the airports. Another choice alternative, the Amtrak train, took half that time and cost only $49. Ms. Klena didn’t take the train because . . . well, she never thinks of taking the train. The train never entered her consideration set.

 Marketers therefore develop strategies to increase the likelihood that a brand will be activated from consumers’ memories and included in their evoked sets of choice alternatives. The activation potential of a brand, sometimes called its top-of-mind awareness, is influenced by many factors. One is the amount of past experience consumers have had in purchasing and using the brand. Consumers are much more likely to think of (activate) brands that they have used before. For this reason, popular brands with higher market shares have a distinct advantage. Because they are used by more consumers, these brands are more likely to be activated from memory and included in more consumers’ consideration sets. This increases the brands’ probability of purchase, which in turn increases their activation potential, and so on. In contrast, unfamiliar and low-market-share brands are at a disadvantage because they are much less likely to be activated in consumers’ evoked sets and thereby be considered as choice alternatives.

 One marketing strategy to increase the activation potential of a brand is the repetitive and costly advertising campaigns devised by marketers of cigarettes, beer, soft drinks, and toothpaste (among others). The heavy expenditures may be worthwhile because brands with high top-of-mind awareness are more likely to be included in the evoked set of choice alternatives that “come to mind” during problem-solving processes.

 Finally, a company’s distribution strategy can influence whether a brand is in consumers’ consideration sets. Consider food products, for which an estimated 65 percent of decisions are made in the store. A key marketing strategy for such products is making sure the product is always on the shelf. This enhances the likelihood that consumers will encounter the brand at the time of the decision, which increases its chances of entering consumers’ consideration sets and thus the probability of purchase.

 Package design can influence both the consideration set and the choice decision. Package design can catch the consumer’s attention in the store and increase the probability of considering the product further. Packaging also can communicate important information such as ingredients, the product’s ease of use, and overall value, which may be integrated into the consumer’s decision process.

 Choice Criteria Consumers’ evaluations of the choice alternatives in the consideration set are based on their beliefs about the consequences of buying those products or brands. The specific consequences used to evaluate and choose among choice alternatives are called choice criteria . Virtually any type of product-related consequence can become a choice criterion in a brand-choice decision, including Salient Beliefs about functional consequences (product performance), psychosocial consequences (admiration of friends), or value consequences (a sense of achievement or self-esteem). For most decisions, consumers probably have beliefs stored in memory about some of the relevant consequences of at least some choice alternatives in their consideration sets. If additional knowledge is desired, consumers may form a subgoal of obtaining information about those choice alternatives. Achieving this subgoal may require intentional search behaviors such as visiting stores, reading Consumer Reports, or talking with knowledgeable friends. Information search may be motivated by consumers’ uncertainty about appropriate choice criteria and/or choice alternatives. In the opening case, Megan engaged in a substantial amount of intentional search to identify possible choice alternatives and form beliefs about appropriate choice criteria.

 The probability that product knowledge is activated and used in the evaluation process is influenced strongly by the means–end relevance of that knowledge to the goal or subgoal being considered. For instance, if the dominant end goal is self-esteem, beliefs about product consequences that are perceived as helping to achieve self-esteem are most likely to be used as choice criteria. Differences in the purchase context, such as buying a sweater for yourself versus buying one as a gift, may activate different end goals (being perceived as stylish versus being perceived as generous). These end goals, in turn, may activate different choice criteria (fashionable design versus expensive looking).

Marketers often place prominent stimuli in the immediate decision environment to activate certain choice criteria from consumers’ memories. For instance, special price tags activate beliefs about price consequences (saving money). Prominent labels on food packages, such as “sugar-free” or “low sodium,” enhance the likelihood that the consequences associated with those attributes (good health) will be used as choice criteria. Finally, salespeople often emphasize certain product benefits in their sales pitches, which increases the likelihood that beliefs about those consequences will be used as choice criteria.

 Not every activated belief about product or brand consequences is necessarily used as a choice criterion. Only discriminant consequences —consequences that are perceived to differ across choice alternatives—can be used as choice criteria. 19 Beliefs about common or very similar consequences of the choice alternatives do not discriminate among alternative actions. To present an obvious example, if all the soft drinks in a vending machine contain caffeine, the consequences of caffeine (stimulation) cannot be used as a choice criterion for deciding which brand to buy. However, if a different set of choice alternatives (brands that vary in caffeine content) is being considered, caffeine content may become a choice criterion. This is an important point. The choice criteria that are relevant (activated) for a decision depend, in part, on the particular set of choice alternatives under consideration. 20 Consumer Insight 7.2 discusses other influences from on-line purchasing that affect consumers’ decision-making processes.

 Consumers’ choice criteria also vary in evaluation. Some choice criteria are perceived as positive, desirable consequences (more horsepower or leather seats) and elicit positive affective responses. Other choice criteria, such as price, may be thought about in negative terms as unpleasant consequences or perceived risks to be avoided. 21 To avoid rejection, marketers may try to reduce perceived risk by assuring consumers of product quality or by offering warranties and guarantees. Consumers tend to reject choice alternatives perceived to have negative consequences unless the alternatives also have several positive consequences. For example, many Americans treat caffeine as a negative choice criterion. The popularity of this choice criterion was influenced by basic changes in societal values about health and by 7UP’s no-caffeine marketing strategy: “Never had it, never will.” Other soft-drink manufacturers responded to consumers’ increasing use of this negative choice criterion by introducing their own brands of caffeine-free soft drinks. Consumers who perceive that a choice involves both positive and negative consequences may be motivated to search for information to resolve the conflict between the benefits and risks of the decision.

 Consumer Insight 7.2

Customer Feedback and Online Decision Aids: New Choice Criteria

Thanks to the Internet, consumers have more ways than ever to gather decision-making information about anything from professors to books to cars. Perhaps you are considering scheduling a class, but first you would like to know what other students think about the professor. Of course, you could ask your friends. But what if they didn’t have that professor? You could check www.rateyourprofessorr.com . There you can find other students’ opinions about the professor. What about that mystery book you were thinking of buying? Your friends don’t read mystery novels. But you can see what others think about the book on www.amazon.com. With the information you gain, you can then make your decision.

 Not only do people use online feedback from others about products (or professors) to aid in their decision making, but with the advent of online auctions they also can get information about the sellers of products. Unlike shopping in a brick and mortar store, where atmospherics and other cues influence judgments of seller reliability (in essence, how much consumers trust the seller), online shoppers must get this information elsewhere. Online auction sites such as e-Bay allow buyers who purchased products from a certain seller to provide feedback on that seller’s service and reliability. Other buyers use this feedback as their key source of seller reliability information—thus aiding in their decision of whether to buy from a certain seller. On Amazon.com, consumers can purchase used books and products from other customers. This consumer-to-consumer feedback (also known as “word-of-Web”) provides more information to consider in the decision-making process.

 Other types of online decision-making aids are available in addition to customer feedback and opinions. Online shopping Web sites are unique compared to their brick-and-mortar counterparts because they offer customizable mechanisms to assist consumers in their decision- making processes. These decision aids can change the way online shoppers make decisions by assisting them with their purchase decisions. Two such mechanisms are the recommendation agent and the comparison matrix. The recommendation agent creates a list of choices tailored to the individual’s preferences after the consumer provides the desired attribute information. Using a recommendation agent, consumers have the ability to efficiently screen their alternatives. Consumers may then select certain alternatives and compare them by a desired attribute using the comparison matrix tool.

 These decision tools are frequently used online to assist consumers in car buying decisions. For instance, www.edmunds.com allows you to select certain criteria (style, price range, etc.) about the type of vehicle you would like to purchase. After a list of recommended vehicles appears, you may then check certain cars to compare side by side. For example, you want to check out new convertibles. You can select “convertibles” and then choose a price range. You’ll go with “$15,000 to $25,000,” since you want to be reasonable. Look at the choices available and decide which cars you would like to compare.

 Research shows that these decision aids have a strong effect on Consumer Decision Making. Humans have been labeled “cognitive misers”—people do not want to expend more mental energy than necessary when making a decision. Online decision aids like the recommendation agent and the comparison matrix do in fact help consumers reduce the amount of energy needed to make a good decision—oftentimes a better decision. How do you think online decision aids will or do affect your consumer decision making?

Exhibit 7.3

INTEGRATION PROCESSES

The integration processes involved in problem solving perform two essential tasks: The choice alternatives must be evaluated in terms of the choice criteria, and then one of the alternatives must be selected. Two types of integration procedures can account for these evaluation and choice processes: formal integration strategies and simpler procedures called heuristics.

 Exhibit 7.4 presents several formal models of the integration processes involved in evaluating and choosing among choice alternatives. The key distinction is between compensatory and noncompensatory approaches.

 Compensatory integration processes combine all the salient beliefs about the consequences of the choice alternatives to form an overall evaluation or attitude ( Aact ) toward each behavioral alternative. The Multiattribute Attitude Model ( Aact = ∑ bi ei) is a compensatory model, so called because a negative consequence (expensive) can be compensated for or balanced by a positive consequence (high status). It is important to recognize that consumers do not necessarily integrate large numbers of beliefs in their evaluation processes. In fact, given their limited cognitive capacity, the number of choice criteria consumers can consider at one time may be quite restricted, perhaps as few as one or two. Although the multiattribute attitude model accounts for how the choice alternatives are evaluated, it does not specify how the consumer chooses which behavior to perform. Most marketers assume consumers select the alternative with the most positive Aact. Other choice rules are possible, however. For instance, consumers might choose the first alternative they find with a positive Aact.

 Exhibit 7.4 also describes several types of noncompensatory integration processes . They are noncompensatory because the salient beliefs about the positive and negative consequences of the choice alternatives do not balance or compensate for each other. For example, applying the conjunctive choice rule requires that an alternative be rejected if any one of its consequences does not surpass a minimum threshold level of acceptability. Thus, Edie might reject a particular model of Reebok aerobic shoe if it has one negative consequence (too expensive), even though it has several other positive consequences (good support, comfortable, stylish colors). As another example, applying a lexicographic integration strategy might require consideration of only one choice criterion, which makes a compensatory process impossible. Tina might evaluate a pair of dress shoes favorably and buy them because they are superior to the other alternatives on the most important consequence (the color matches her outfit exactly), whereas other, even unfavorable consequences are not considered (not durable and slightly uncomfortable).

 Research suggests consumers do not seem to follow any single rule or strategy in evaluating and choosing from among alternatives. For one thing, they probably do not have sufficient cognitive capacity to simultaneously integrate several beliefs about many alternatives. Compensatory integration processes are especially likely to exceed cognitive capacity limits. Moreover, many problem-solving tasks do not involve a single choice to which a single integration rule could be applied. Instead, consumers make multiple choices in most purchase situations (choices of information sources to examine, stores to visit, product forms or brands to buy, methods of payment). Each choice is a distinct subproblem that requires separate integration processes.

 Rather than a single integration strategy, consumers are likely to use a combination of processes in many problem-solving situations. A noncompensatory strategy might be used to quickly reduce the choice alternatives to a manageable number by rejecting those that lack one or two key criteria (a conjunctive strategy). For example, Bill might reject all restaurants that do not have a salad bar. Then the remaining brands in his consideration set (perhaps only two or three restaurants) could be evaluated on several choice criteria (price level, variety, atmosphere) using a more stringent compensatory strategy.

 Another issue is whether consumers have complete integration rules stored in memory ready to be activated and applied to the relevant product belief. Current research suggests instead that most integration processes are constructed at the time they are needed to fit the current situation. This suggests that rather than following fixed strategies, consumers’ integration processes are relatively simple, very flexible, and easily adapted to varying decision situations. These simple integration “rules” are called heuristics.

 Basically, heuristics are simple “if . . . , then . . . ” propositions that connect an event with an appropriate action. Because they are applied to only a few bits and pieces of knowledge at a time, heuristics are highly adaptive to specific environmental situations and are not likely to exceed cognitive capacity limits. Heuristics may be stored in memory like miniature scripts that are applied fairly automatically to information encountered in the environment. Or they may be constructed on the spot in response to the immediate environment.

 Exhibit 7.5 presents examples of three types of heuristics that are particularly important in problem solving. Search heuristics are simple procedures for seeking information relevant to a goal. Some consumers have a simple search rule for buying any small durable product such as a radio or a kitchen appliance: Read the product tests in Consumer Reports. Evaluation heuristics are procedures for evaluating and weighing beliefs in terms of the current goal being addressed in the problem-solving process. Dieting consumers may have a heuristic that identifies the most important choice criteria for food: low in calories and the resulting consequence of losing weight. Choice heuristics are simple procedures for comparing evaluations of alternative actions in order to choose one. A simple choice heuristic is to select the alternative you bought last time if it was satisfactory; another is to rely on an expert’s advice.

Exhibit 7.4

Exhibit 7.5

DECISION PLAN

The process of identifying, evaluating, and choosing among alternatives during problem solving produces a decision plan made up of one or more behavioral intentions. Decision plans vary in their specificity and complexity. Specific decision plans concern intentions to perform particular behaviors in highly defined situations: “This afternoon Jim intends to go to Penney’s and buy a blue cotton sweater to go with his new slacks.” Other decision plans involve rather general intentions: “Paula intends to shop for a new car sometime soon.” Some decision plans contain a simple intention to perform a single behavior: “Andy intends to buy a large tube of Aim toothpaste.” In contrast, more complex decision plans involve a set of intentions to perform a series of behaviors: “Val intends to go to Bloomingdale’s and Macy’s, browse through their sportswear departments, and look for a lightweight jacket.”

 Having a decision plan increases the likelihood that the intended behaviors will be performed. However, behavioral intentions are not always carried out. For instance, a purchase intention may be blocked or modified if environmental circumstances make it difficult to accomplish the decision plan. Perhaps the problem-solving process will recycle and a new decision plan might be developed: “Andy found that the store was sold out of large tubes of Aim, so he decided to buy two medium-size tubes.” Sometimes unanticipated events identify additional choice alternatives or change consumers’ beliefs about appropriate choice criteria; this could lead to a revised decision plan: “While reading the paper, Val learned that Saks was having a 25 percent-off sale on lightweight jackets, so she decided to shop there first instead of Bloomingdale’s.”

Problem-Solving Processes in Purchase Decisions

 The amount of cognitive and behavioral effort consumers put into their problemsolving processes is highly variable. Problem-solving effort varies from virtually none (a decision plan is activated from memory and carried out automatically) to very extensive. For convenience, marketers have divided this continuum into three levels of problem-solving activity: extensive, limited, and routinized or habitual.

 Relatively few consumer choice problems require extensive decision making . Extensive decision making usually involves a substantial amount of search behavior to identify choice alternatives and learn the appropriate choice criteria with which to evaluate them. Extensive decision making also involves several choice decisions and substantial cognitive and behavioral effort. Finally, it is likely to take rather long periods—such as Megan’s decision to buy a used car in the opening example or purchasing your first sound system.

 Many consumers’ choice problems require limited decision making . The amount of problem-solving effort in limited decision making ranges from low to moderate. Compared to extensive decision making, limited decision making involves less search for information. Fewer choice alternatives are considered, and less integration processing is required. Choices involving limited decision making usually are carried out fairly quickly, with moderate levels of cognitive and behavioral effort.

 For still other problems, consumers’ choice behavior is habitual or routine. Routinized choice behavior , such as buying another Pepsi from the vending machine down the hall or purchasing a package of gum at the checkout counter, occurs relatively automatically with little or no apparent cognitive processing. Compared to the other levels, routinized choice behavior requires very little cognitive capacity or conscious control. Basically, a previously learned decision plan is activated from memory and carried out relatively automatically to produce the purchase behavior.

 The amount of effort consumers exert in problem solving tends to decrease over time as they learn more about a product and gain experience in making decisions. With repeated decisions, product and brand knowledge becomes organized into means–end structures and becomes more clearly related to consumers’ goals. Consumers also learn new productions and heuristics, which become organized into scripts or decision plans stored in memory. When activated, these heuristics and decision scripts automatically affect purchase-related behaviors. Running down to the convenience store for a loaf of bread or stopping to fill up the car’s tank at a favorite gas station are well-developed decision plans that require little cognitive effort.

 As another example of routinized choice behavior, consider the study of 120 consumers who were observed shopping and buying laundry detergent in three chain grocery stores. Most consumers examined very few packages of detergent. In fact, 72 percent looked at only one package and only 11 percent looked at more than two. An even lower number of packages were physically picked up: 83 percent of the consumers picked up only one package, and only 4 percent picked up more than two. Obviously most of these consumers did not engage in much in-store problem-solving activity for this product.

 Finally, consumers took an average of 13 seconds after they entered the aisle to make their detergent choices. Given that the detergent section spanned an entire aisle and several seconds were required to walk to the appropriate area, it is obvious these typical consumers were making an extremely quick choice involving minimal cognitive and behavioral effort. The majority of consumers in this study were engaged in routinized choice behavior. They were merely carrying out a simple decision plan; for example, find the large size of Tide and buy it.

Influences on Consumers’ Problem- Solving Activities

 The level of consumers’ problem-solving effort in making brand purchase decisions is influenced by environmental factors as well as the cognitive (knowledge) and affective responses activated during the problem-solving process. We discuss three aspects of this activated knowledge and affect that have direct effects on problem solving: (1) consumers’ goals; (2) their knowledge about choice alternatives and choice criteria, as well as heuristics for using this knowledge; and (3) their level of involvement. Following the discussion of these Affective and Cognitive factors, we examine several environmental influences on consumer problem solving.

EFFECTS OF END GOALS

The particular end goals consumers are striving to achieve have a powerful effect on the problem-solving process. Exhibit 7.6 presents five broad end goals that lead to quite different problem-solving processes. For instance, consumers who have an optimizing end goal are likely to expend substantial effort searching for the best possible alternative. In contrast, consumers with a satisfaction/maintenance end goal are likely to engage in minimal search behavior. In yet other decisions, consumers may have conflicting end goals that must be resolved in the problem-solving process.

 In general, marketers have relatively little direct influence over consumers’ abstract end goals, such as basic values. However, marketers can try to influence less abstract end goals, such as desired functional or psychosocial consequences, through promotional strategies. Perhaps the major implication for marketers is to identify the dominant goals in consumers’ problem representations and design product and promotion strategies that link product attributes to those goals.

Exhibit 7.6

GOAL HIERARCHIES

Consumers’ goal hierarchies for a problem have a powerful influence on problemsolving processes. If consumers have a well-defined goal hierarchy stored in memory, it may be activated and the associated decision plan carried out automatically. Even if a complete decision plan is not available, a general goal hierarchy provides a useful structure for developing an effective decision plan without a great deal of problemsolving effort.

 In contrast, consumers who have little past experience will not have well-developed goal hierarchies. Their problem solving is likely to proceed haltingly, by trial and error. Consider first-time buyers of relatively important products such as televisions, sports equipment, cars, and houses. These consumers must construct a goal hierarchy (a series of subgoals that seem related to the end goal) and develop a decision plan to achieve each subgoal (as Megan had to do in the opening example). In these types of decisions, marketers are likely to find confused or frustrated consumers who use general “strategies” such as wandering around various stores in a mall hoping to accidentally run into something that will satisfy their end goals.

 Another reason for browsing without a specific decision plan in mind is that the consumer feels involved with a particular product class or form and likes to associate with it. Consumers who are very interested in music may enjoy exploring music Web sites. Some consumers are involved with a particular store or set of stores in a mall or a shopping area in town. Perhaps the atmosphere of these stores is exciting and stimulating, which provides part of the attraction. In sum, browsing can and usually does serve multiple goals, needs, and values for different consumers.

CONSUMER PROBLEM-SOLVING

Consumers’ problem-solving processes are greatly affected by the amount of product knowledge they have acquired through their past experiences and by their level of involvement with the product and/or the choice process. The activated knowledge about goals, choice alternatives and choice criteria, and heuristics affects consumers’ ability to create an effective decision plan. And, consumers’ involvement with the product or decision affects their motivation to engage in the problem-solving process. Exhibit 7.7 summarizes how different combinations of product knowledge and involvement influence specific elements of consumers’ problem representations and the overall problem-solving process. Marketers should determine the levels of knowledge and involvement of their target customers and develop strategies consistent with the types of problem solving described in Exhibit 7.7 . Consumer Insight 7.3 describes how Procter & Gamble responded to consumers who were engaged in routinized problem solving (low knowledge and involvement) because of too many choices.

 Consumer Insight 7.3

P&G’s Simplifying Solutions to the Proliferation of Consumer Choice

Years ago, more people took their time while shopping, browsing among the merchandise, and deliberating about their choices; but consumer decision making changed. Browsing time in 1996 was down by 25 percent compared to 1991. On an average grocery shopping trip in 1996, consumers spent an average of just 21 minutes to buy 18 of the approximately 30,000 items available in a supermarket. Many consumers do not bother to check the prices—they just want to buy the same products at the same prices each week.

 Perhaps these habitual decision-making processes are reactions to the proliferation of choices they face in the supermarkets and elsewhere. In addition to the many brands in each product category, it seems that each brand comes in dozens of model variations and sizes. Each of these choice alternatives is being marketed with promotions, advertising, package design, and so forth. In the late 1980s, Procter & Gamble, perhaps the top consumer goods company in the world, made as many as 50 price changes per day across 110 brands, offered 440 sales promotions each year, and constantly tinkered with the package size, color, and contents. “We were confusing [consumers],” admitted P&G president and COO, Durk Jager.

 With this recognition, P&G began to overhaul many of its sales and marketing activities. By 1997, P&G had eliminated 25 percent of its products by selling off some brands (Lava soap and Aleve pain reliever) and cutting the number of alternatives in its other product lines. For instance, P&G halved the variations of Head & Shoulders shampoo from 30 to 15. When P&G learned that most mothers did not want boy and girl diapers, it began selling only unisex diapers. The simplification process will continue. By 2000, P&G cut out another 20 percent of its products.

 Why did P&G take such seemingly drastic action? According to Jager, “Consumers were drowning in far too many products.” Although consumers may like variety, “too much meaningless variety” is not good. Offering too many choices complicates consumer decision making and might backfire on a company. A company that simplifies consumers’ decision making may create substantial goodwill and greater sales.

Exhibit 7.7

ENVIRONMENTAL STIMULI

Environmental factors can affect consumer decision making by disrupting the ongoing flow of the problem-solving process. Four types of disruptive events, or interrupts , have been identified. First, interrupts can occur when unexpected information (inconsistent with established knowledge structures) is encountered in the environment. For instance, carrying out a decision plan or script may be interrupted when you unexpectedly find that aspects of the physical or social environment have changed: A store has been remodeled and departments have been moved around, a rejected brand now has a new attribute, or your friends now favor a different night spot. Such environmental interrupts may cause the consumer to take conscious control of the problem-solving process, identify a new end goal, develop a new goal hierarchy, and construct a different decision plan. A 1997 strike at United Parcel Service (UPS) created a dramatic interruption for many businesses. As many as 90 million parcels were not picked up from small retailers and manufacturers during the 15-day strike. Many UPS customers vowed to diversify their shipping business in the future, allowing the U.S. Postal Service and FedEx to capture some of UPS’s customers.

 Second, prominent environmental stimuli can interrupt a problem-solving process. Many marketing strategies are intended to interrupt consumers’ ongoing problem solving. For instance, a large in-store display for Oreo cookies, “as advertised” shelf tags, or the announcement of a sales promotion (“Attention, shoppers. In aisle 3B we are offering…”) may interrupt an ongoing problem-solving process as well as activate new knowledge or goals from memory.

 Third, affective states such as moods (feeling bored) and physiological events (feeling hungry, sleepy, or thirsty) can interrupt an ongoing problem-solving process. For instance, feeling tired during a shopping trip might activate new goals and start a different problem-solving process (find a comfortable place to sit down and have a soda or cup of coffee). Getting into a bad mood can terminate a problemsolving process.

 Fourth, conflicts that arise during the course of purchase decision making can interrupt the problem-solving process (see Consumer Insight 7.4). Goal conflict occurs when consumers recognize the presence of incompatible goals. Goal conflict may occur when consumers discover that alternatives cannot be found to satisfy incompatible goals. For instance, Susan may experience an approach–approach conflict in choosing between a new camera and a new stereo receiver because each product leads to a desirable goal (creativity and relaxation, respectively), but neither product can satisfy both goals. Avoidance–avoidance conflicts occur when consumers must choose between two alternatives with different negative consequences. For instance, Sam is trying to decide whether to buy a new mountain bike. He doesn’t want to be embarrassed by continuing to ride his old bike, but he doesn’t want to spend money on a new one, either. Finally, approach–avoidance conflicts occur when consumers consider both the positive and negative consequences of a purchase or action. For instance, Paul is trying to decide about a new MP3 player that is on sale for a very low price (positive outcome), but he is afraid the quality may be low (negative outcome). Consumer Insight 7.4 describes goal conflict in a common decision.

 The effects of interrupts on consumers’ problem-solving processes depend on how consumers interpret (comprehend) the interrupting event. In general, consumers tend to resume an interrupted problem-solving task, especially if it is important or involving. In other cases, an interrupting event can change the problem- solving process. For instance, an interrupt may activate new end goals that require a new problem-solving process. Interrupt events (such as learning about a new product attribute) may activate knowledge structures that suggest new decision criteria. In other cases, a choice heuristic may be activated by the interrupt (a friend recommends a brand, and you decide to take her advice). Finally, an especially strong interrupt, such as losing your job, may block the current problemsolving process (choosing a new car), and the process may not resume. In sum, the effects of interrupts depend on how the consumer interprets them. For instance, is your hunger severe enough to interrupt your shopping for new jeans, or can you skip lunch today? Does this new brand of hairstyling spray seem worth trying, or should you pass it up? Do you care that your friend thinks these shoes look ridiculous?

 Consumer Insight 7.4

Goal Conflict During Decision Making

For years, fur coats were symbols of fashion, wealth, and elegance. But thanks to a highly publicized antifur movement, fur sales tumbled 50 percent in the late 1980s. In 2000, however, as the economy boomed and antifur activists became less visible, fur made a comeback. It appears that consumers are torn between the positives (looking good and staying warm) and the negatives (public scorn and concern for animal welfare) associated with wearing fur.

 In the 1990s, the group People for the Ethical Treatment of Animals was in the forefront of a very effective and creative campaign to discourage people from wearing fur. Antifur activists appealed to consumers’ sense of humanity by graphically exposing the often inhumane ways in which animal pelts are harvested (for example, anal electrocutions of minks). Celebrities became involved in the cause, many posing without clothes in ads that stated, “I’d rather go naked than wear fur.” Some activists took a more personal approach, dousing fur wearers on the street with fake blood. Wearing fur soon became almost unconscionable. In London, department stores began to stow their furs away in massive refrigerators because no one would buy them. Consumers who already owned fur coats (but wouldn’t wear them) paid to have them stored in large warehouses. Furriers everywhere went out of business.

 But slowly and quietly, fur made a comeback. In 1999, fur sales rose 10 percent from the previous year,while 220 designers used fur in their collections, five times more than in 1995. In one week in New York City in 2000, Oscar de la Renta, Tommy Hilfiger, Marc Jacobs, and rapper-turned-designer Sean “Puffy” Combs all featured fur at their fashion shows. While in the 1980s fewer than 50 fashion designers included fur in their collections, in winter 2003/4 the number was over 400.

 Why the fur revival? The good economic times helped, making it possible for more consumers to afford fur. Also, the antifur movement may have become less of a chic cause than it was a decade earlier. Furthermore, it is now easier for designers to use fur that doesn’t look like fur by incorporating it into blended fabrics. In this less natural-looking form, fur is perhaps more acceptable. But clearly, many are still uneasy when confronted with the harsh reality that fur comes from dead animals. When designer John Galliano mounted a fox’s head on a garment, it became worldwide news. Similarly, singer Mary J. Blige generated controversy by sporting a coat festooned with rabbit claws. Designer Katayone Adeli was planning to use fur in her collection, but she was shocked when she saw the pelts. Instead, she opted for fake fur.

 The conflict some consumers experience in deciding whether to buy and wear fur is not unique. Many other consumer decisions involve similar conflicts and uncertainties.

CHOICE BEHAVIOR

To develop effective marketing strategies, marketers need to know the types of problem-solving processes their customers use to make purchase decisions. As shown in Exhibit 7.7 , these processes can vary widely. Marketers that target several consumer segments, each with different problem-solving processes, may have to develop multiple strategies to influence the different decision outcomes. In the following sections we consider some general implications for marketing strategies for routinized choice behavior and limited and extensive decision making.

 Routinized Choice Behavior.  Much consumer choice behavior is routinized. When consumers think they know all they need to know about a product category, they are not motivated to search for new information. Their choice behavior is based on a learned decision plan stored in memory. In such cases, the appropriate market strategy depends on the strength of the brand’s position in the market.

 Marketers of established brands with substantial market shares must maintain their brands in the evoked sets of a significant segment of consumers. Because consumers in this situation engage in little or no research, marketers have minimal opportunities to interject their brands into consumers’ consideration sets during problem solving. Thus, it is important that a brand be included in the choice alternatives activated at the beginning of the problem-solving process. In general, the more automatic the choice behavior becomes, the more difficult it is for marketers to interrupt and influence the choice.

 Marketers of new brands or brands with a low market share must somehow interrupt consumers’ automatic problem-solving processes. They may develop strategies of producing prominent environmental stimuli such as large or unusual store displays, create strong package graphics that stand out on the shelf, give away free samples, or run sales promotions (buy one, get one free). Such strategies are intended to catch consumers’ attention and interrupt their routine choice behaviors. The goal is to jolt consumers into a more conscious and controlled level of limited decision making that includes the new brand in the consideration set.

 Finally, marketers of leading brands such as Doritos snack chips, Snickers candy bars, Budweiser beer, and Dell computers may want consumers to follow a routine choice process. Because these brands already have a high market share, they are in the evoked sets of many buyers. It is important for these marketers to avoid marketing-related environmental interrupts such as stockouts, which could jolt consumers into a limited decision-making process and lead them to try a competitor’s brand. One critical aspect of the overall marketing strategy for such brands is an efficient distribution system to keep the brands fully stocked and available (in a prominent shelf/display position) whenever consumers are in a choice situation. Frito-Lay, manufacturer of Fritos, Ruffles potato chips, and many other snack products, has developed a superb distribution system partly for this reason. Marketers of industrial products attempt to make their buyers’ decision-making processes more routine by computerizing and automating the order process.

 Limited Decision Making.  Most consumer decisions involve limited problem-solving effort. Because most consumers already have a lot of information about the product from previous experiences, the basic marketing strategy here is to make additional pieces of information available to consumers when and where they need them. Advertisements to increase top-of-mind awareness may help get a brand into the evoked set of choice alternatives at the beginning of the decision process. This is important because most consumers are not likely to search extensively for other alternatives. Moreover, it is critical that the brand be perceived to possess the few key choice criteria used in the evaluation process. Advertisements that capture consumers’ attention and communicate favorable beliefs about salient attributes and consequences of the brand may be able to create that knowledge.

 Finally, because consumers are giving some conscious thought to the decision, successful interrupts are not as difficult as they are with routinized problem solving. Marketers may try to design a store environment that stimulates impulsive purchases, a type of limited decision making.

 Extensive Decision Making.  Compared to more common routinized choices and limited decision making, relatively few consumer decisions involve extensive problem solving. However, when consumers do engage in extensive decision making, marketers must recognize and satisfy their special needs for information. In extensive decision-making situations where their knowledge is low, consumers need information about everything—including which end goals are important, how to organize goal hierarchies, which choice alternatives are relevant, what choice criteria are appropriate, and so on. Motivated consumers may seek such information from many sources. For instance, a 1997 survey by Wirthlin Worldwide, a marketing research firm, found that more than two-thirds of consumers who were planning vacations sought advice from family and friends, about one-third consulted travel guidebooks, and 27 percent spoke with travel agents. 44 About 11 percent got information from travel channels on TV, and 17 percent found relevant information through the Internet. Marketers should strive to make the necessary information available in a format and at a level that consumers can understand and use in the problem-solving process. Consumer Insight 7.5 describes how some companies provide special information to consumers buying new cars.

 Because consumers intentionally seek product information during extensive decision making, interrupting their problem-solving processes with a brand promotion is relatively easy. Informational displays at the point of purchase—for instance, displays of mattresses that are cut apart to show construction details— or presentations by salespeople can be effective sources of information. Complex sales materials such as brochures and product specifications may be effective, along with high-information advertisements. Consumers in extensive problem-solving situations will attend to relevant information, and they are motivated to comprehend it. Marketers may take advantage of consumers’ receptivity to information by offering free samples, coupons, or easy trial (take it home and try it for a couple of days) to help consumers gain knowledge about their brands.

 Consumer Insight 7.5

Using the Internet to Simplify the Car Buying Process

Buying a new car usually involves haggling with a salesperson over prices and options. Many consumers find this process uncomfortable, even offensive. According to one study, nearly 40 percent of consumers prefer one-price shopping. Fortunately for those people, there are alternatives that reduce or eliminate the aversive consequences of negotiating with an auto dealer.

 You can now buy a new vehicle entirely through the Internet. Let’s say you are shopping for a Chevy Trailblazer. You can visit Dealer Net (www.dealernet.com) to compare the Trailblazer to, say, the Nissan Pathfinder or Jeep Cherokee on price, safety, and fuel economy. Then you can click over to Edmund Publications (www.edmund.com) to get the current invoice price (what the dealer pays the manufacturer). From there, you can visit Autoweb.com, where you type in the model, color, and options you want and receive a quote from a local dealer. From there, it is up to you to contact the dealer and finish the transaction. Or you can take that quote to another dealer and try to bargain for an even better price. If you are extremely averse to car dealers, you don’t have to deal with them at all. AutobytelDIRECT (www.autobytel.com) will contact a dealer and negotiate a price for you. If you want, they can even arrange to have the vehicle delivered to your home so you never have to set foot on a dealer’s lot! Is it worth it? Possibly. According to a J. D. Power & Associates survey, Internet shoppers saved an average of $500 on new-car purchases compared to those who visited the showroom.

 Of course, buying a vehicle on the Internet is not for everyone—in 1999 only 1 percent of auto sales were made via the Web—but the Internet can be a valuable resource nonetheless. J. D. Power & Associates says 60 percent of car buyers now use the Internet for research and price comparisons. Even the National Automobile Dealers of America has begun to post invoice prices on its Web site ( www.nada.org ). So even if you feel the need to kick the tires and lift the hood before you make a purchase, you can still use the Web to collect a lot of information, which will put you in a position of strength when negotiating with a salesperson.