Consumer decision making

Consumer decision making

1. Decision making quality

   • DM quality may be affected by the processing strategy which is used for a decision (Payne et al., 1988)
     • "predictions about choice quality are based upon the strategies consumers use to manage choice difficulty" (Coupey, 2015)

2. Consumer decision strategies (processing strategies)

   • two main categories / two distint patterns of information acquistiton: attribute based & alternative based (Bettman & Zins, 1979; Payne, Bettman, & Johnson, 1993)
     • named differently: Russo & Dosher (1983): dimensional processing & holistic processing // Bettman & Kakkar (1977): “Choice by Processing Attributes” (CPA) & Choice by Processing Brands” (CPB) (brand-based processing)
     • Examples: Attribute-based: Lexicographic (Bettman et al., 1991), Additive difference (Tversky, 1969), Eimination-by-aspects (Tversky, 1972), Majority of confirming dimensions (Russo & Dosher, 1983)
       • Lexicographic strategy: involves limited amount of information, noncompensatory --> less effort by part of the decision maker (Bettman et al., 1998)
     • Examples: Alternative-based: Weighted adding (Bettman et al., 1991), equal weight (Daves, 1979), satisficing (Simon, 1955), frequency of good & bad features (Alba & Marmorstein, 1987))
       • Weighted Adding / Equal Weight: extensive, compensatory requires explicit trade-offs, (Bettman et al., 1998), more in line with economic models of rational decision making--> "more normatively accurate" (Frisch & Clemen, 1994)
         • Link to monetary scarcity --> trade-off making
     • Attribute-based processing: cognitively easier because products can be compared using the same reference units (Tversky, 1972) and require less time to make a choice (Bettman & Zins, 1979) --> less involvement
     • Alternative-based: require higher involvement
   • use of strategy can be dependent on
     • information presentation format (Bettman & Kakkar, 1977)
       • 3 types to present information in a choice set: matrix format, by brand (alternative), by attribute
         • matrix format: allows for both attribute based and alternative based processing quite easily (Bettman & Zins, 1979)
           • Early eye tracking studies point to different directions: some found that consumers use attribute-based processing (Russo & Dosher, 1975; Russo & Rosen, 1975) or brand processing (Bettman & Kakkar, 1977) more frequently for information presented in matrix format, whereas others found that they are used equally frequent (Bettman and Jacoby 1976)
     • characteristics of the decision maker (individual information processing abilities)
       • Capon & Burke (1980): higher SES consumers engage more deeply in information search
     • prior experience / learning goals of the consumer (Bettman & Kakkar, 1977)
     • characteristics of the choice set (number of brands, attributes (Bettman et al., 1991)

3. Rational choice theory (consumers select the alternative with the highest utility) was found to be incomplete in explaining consumer choices.

   • "consumers use a variety of decision strategies when making decisions" Bettman et al. (1998)
   • Alternative account: information processing approach: preference formation depends on the way information is searched and evaluated: Concept of "bounded rationality" (Simon, 1955): consumers capacity for processing information is limited