Individual Decision Making

Topics: Decision making, Decision theory, Risk Pages: 36 (10244 words) Published: October 20, 2012

When students have finished reading this chapter, they should understand why:

Consumer decision-making is a central part of consumer behavior, but the ways people evaluate and choose products (and the amount of thought they put into these choices) vary widely depending upon such dimensions as the degree of novelty or risk related to the decision.

A decision is actually composed of a series of stages that results in the selection of one product over competing options.

Our access to online sources is changing the way we decide what to buy.

Decision making is not always rational.

Consumers rely upon different decision rules when evaluating competing options.

We often fall back on well-learned “rules-of-thumb” to make decisions.


Consumers are faced with the needs to make decisions about products and services on a constant basis. Some of the decisions are very important to the consumer and entail great effort, while others are made on virtually an automatic or impulse basis. Perspectives on decision making range from a focus on habits that people develop over time to a focus on novel situations involving a great deal of risk where consumers must carefully collect and analyze information prior to making choices.

A typical decision process involves several steps. The first step is how consumers recognize the problem (problem recognition). Realization that a problem exists may be prompted in a variety of ways, ranging from actual malfunction of a current purchase to a desire for new things based on exposure to different circumstances or advertising that provides a glimpse into what is needed to “live the good life.” Shifts in the actual or ideal state are at the heart of problem recognition.

The second step is information search. This may range from simply scanning memory to determining what has been done to resolve the problem in the past to undertaking extensive fieldwork where the consumer consults a variety of sources to amass as much information as possible from a variety of sources. In many cases, people engage in surprisingly little search. Instead, they rely upon various mental shortcuts, such as brand names or price, or they simply imitate others.

In the third stage the consumer performs an evaluation of alternatives that were developed in the search stage. The product alternatives that are considered comprise the individual’s evoked set. Members of the evoked set usually share some characteristics (i.e., they are categorized similarly). The way products are mentally grouped influences which alternatives will be considered, and some brands are more strongly associated with these categories than are others (i.e., they are more prototypical).

Very often, evaluative criteria (dimensions used to judge the merits of competing options) and heuristics (mental rules of thumb) are used to simplify decision making. In particular, people may develop many market beliefs over time. One of the most common beliefs is that price is positively related to quality. Other heuristics rely on well-known brand names or a product’s country of origin as signals of product quality. When a brand is consistently purchased over time, this pattern may be due to true brand loyalty or simply to inertia because it’s the easiest thing to do.

When the consumer eventually must make a product choice from among alternatives, a number of decision rules may be used. Noncompensatory decision rules eliminate alternatives that are deficient on any of the criteria the consumer has chosen to use. Compensatory decision rules, which are more likely to be applied in high-involvement situations, allow the decision maker to consider each alternative’s good and bad points more carefully to arrive at the overall best choice.


1. Consumers as Problem Solvers
a. Most consumers go through a series of steps when they make a purchase. They are:
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