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Psyching out customer choice
Research by Itamar Simonson
ALTHOUGH satisfying customer needs is the name of the game in marketing,
identifying those needs is easier said than done. Study after study shows that
self-reported preferences do not match buying behavior. Instead, seemingly irrational
factors can influence consumer decision making.
In an effort to better understand how buyers make their decisions, Itamar Simonson , associate professor of marketing, has been studying consumer behavior since 1987. His conclusion: Consumers do not have well-established preferences, so marketers need to find out not only what consumers want, but what factors influence their decision-making processes.
In a series of studies on consumer behavior, Simonson has found that:
- Consumers are more likely to choose an alternative after a relatively inferior option is added as a choice. For example, Simonson says, participants in one study were given a choice between $6 and an elegant Cross pen. A second group chose among $6, the same Cross pen, and a second pen that was clearly less attractive than the Cross pen. As was predicted, the addition of the unattractive pen increased the share of the Cross pen at the expense of the $6.
- Consumers prefer alternatives that are compromise choices. Given a choice between two alternatives, one priced lower than the other, the addition of a third choice, priced higher than both, will increase the market share of the more expensive of the original two. This finding suggests that companies can increase their overall sales and shift purchases to higher-margin items by carefully designing the sets of alternatives that their customers consider.
- Buyers are averse to choosing the lowest-quality alternative in sets of three or more choices. One of the implications of this finding is that marketers of well-known, high-priced brands should encourage retailers to organize floor displays by model type, whereas marketers of lesser-known, lower-priced brands should prefer organization by brand.
- Consumers who think about the possibility that their purchase decisions will be wrong are more likely to choose better-known brands. In a test case, Simonson showed that consumers debating between a better-known, more expensive brand and a lesser-known, less expensive brand expect to feel greater regret if they err by choosing the cheaper option. Indeed, after thinking about the possibility of regret, consumers were more likely to select the better-known brand. Kodak film has capitalized on this finding with an advertising campaign that asks consumers to consider how they would feel if they bought cheap film and their pictures didn't turn out.
- The manner in which consumers compare alternatives can determine which option they choose. For example, consumers who were asked how much more or less they liked fruit salad compared with frozen yogurt were much more likely to choose the fruit salad than consumers who were asked how much more or less they liked frozen yogurt compared with fruit salad.
- Consumers tend to select variety when buying multiple products for consumption at a later time. In each of three weeks, Simonson asked a group of respondents to select one of six familiar snacks for immediate consumption. A second group was asked to pick three snacks -- one for immediate consumption and one for each of the next two weeks. Both groups were told that they could pick the same snack as many times as they wished. Those in the first group tended to select the same snack all three times, whereas most in the second group selected three different snacks.
- Modifying a product with a feature or premium that is of little or no value to the consumer, even without raising the price, may actually decrease sales. When consumers are uncertain about their preferences, a product that offers an unneeded add-on (such as an offer to purchase a Pillsbury Doughboy collector's plate) provides them with a reason for rejecting it.
While marketing professionals can use these findings to influence consumer decision making, consumers, too, can benefit by understanding their own behavior. "One of the points of our research is to inform consumers about some of the factors that influence their decisions," Simonson says. "With such knowledge, they may be able to make better, more thoughtful decisions."
Susan Wolfe
Related articles:
- The consumer as critic; Research by Peter Wright
- Factoring in the warranty; Research by V. Padmanabhan
- A package deal; Research by Kevin Lane Keller
- In store brands, quality sells; Research by Rajiv Lal
- Comparative strategies in marketing; Research by David Mongomery
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