Buyer decision processes
From Biocrawler, the free encyclopedia.
Buyer decision processes are the decision making processes undertaken by consumers in regards to a potential market transaction before, during, and after the purchase of a product or service.
More generally, decision making is the cognitive process of selecting a course of action from among multiple alternatives. Common examples include shopping, deciding what to eat. Decision making is said to be a psychological construct. This means that although we can never "see" a decision, we can infer from observable behaviour that a decision has been made. Therefore we conclude that a psychological event that we call "decision making" has occurred. It is a construction that imputes commitment to action. That is, based on observable actions, we assume that people have made a commitment to effect the action.
In general there are three ways of analysing consumer buying decisions. They are:
- Economic models - These models are largely quantitative and are based on the assumptions of rationality and near perfect knowledge. The consumer is seen to maximize their utility. See consumer theory. Game theory can also be used in some circumstances.
- Psychological models - These models concentrate on psychological and cognitive processes such as motivation and need reduction. They are qualitative rather than quantitative and build on sociological factors like cultural influences and family influences.
- Consumer behaviour models - These are practical models used by marketers. They typically blend both economic and psychological models.
Nobel laureate Herbert Simon sees economic decision making as a vain attempt to be rational. He claims (1947 and 1957) that if a complete analysis is to be done, a decision will be immensely complex. He also says that peoples' information processing ability is very limited. The assumption of a perfectly rational economic actor is unrealistic. Often we are influenced by emotional and non-rational considerations. When we try to be rational we are at best only partially successful.
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Models of buyer decision making
In an early study of the buyer decision process literature, Frank Nicosia (Nicosia, F. 1966; pp 9-21) identified three types of buyer decion making models. They are the univariate model (He called it the "simple scheme".) in which only one behavioural determinant was allowed in a stimulus-response type of relationship; the multi-variate model (He called it a "reduced form scheme".) in which numerous independent variables were assumed to determine buyer behaviour; and finally the system of equations model (He called it a "structural scheme" or "process scheme".) in which numerous functional relations (either univariate or multi-variate) interact in a complex system of equations. He concluded that only this third type of model is capable of expressing the complexity of buyer decision processes. In chapter 7, Nicosia builds a comprehensive model involving five modules. The encoding module includes determinants like "attributes of the brand", "environmental factors", "consumer's attributes", "attributes of the organization", and "attributes of the message". Other modules in the system include, consumer decoding, search and evaluation, decision, and consumption.
General model
A general model of the buyer decision process consists of the following steps:
- Want recognition;
- Search of information on products that could satisfy the needs of the buyer;
- Alternative selection;
- Decision-making on buying the product;
- Post-purchase behavior.
Decision making style
According to Myers (1962), a person's decision making process depends to a significant degree on their cognitive style. Starting from the work of Karl Jung, Myers developed a set of four bi-polar dimensions. The terminal points on these dimensions are: thinking and feeling; extraversion and introversion; judgement and perception; and sensing and intuition. He claimed that a person's decision making style is based largely on how they score on these four dimensions. For example, someone that scored near the thinking, extroversion, sensing, and judgement ends of the dimensions would tend to have a logical, analytical, objective, critical, and empirical decision making style.
Cognitive and personal biases in decision making
It is generally agreed that biases can creep into our decision making processes, calling into question the correctness of a decision. Below is a list of some of the more common cognitive biases.
- Selective search for evidence - We tend to be willing to gather facts that support certain conclusions but disegard other facts that support different conclusions.
- Premature termination of search for evidence - We tend to accept the first alternative that looks like it might work.
- Conservatism and inertia - Unwillingness to change thought patterns that we have used in the past in the face of new circumstances.
- Experiential limitations - Unwillingness or inability to look beyond the scope of our past experiences; rejection of the unfamiliar.
- Selective perception - We actively screen-out information that we do not think is salient.
- Wishful thinking or optimism - We tend to want to see things in a positive light and this can distort our perception and thinking.
- Recency - We tend to place more attention on more recent information and either ignore or forget more distant information.
- Repetition bias - A willingness to believe what we have been told most often and by the greatest number of different of sources.
- Anchoring - Decisions are unduly influenced by initial information that shapes our view of subsequent information.
- Group think - Peer pressure to conform to the opinions held by the group.
- Source credibility bias - We reject something if we have a bias against the person, organization, or group to which the person belongs: We are inclined to accept a statement by someone we like.
- Incremental decision making and escalating commitment - We look at a decision as a small step in a process and this tends to perpetuate a series of similar decisions. This can be contrasted with zero-based decision making.
- Inconsistency - The unwillingness to apply the same decision criteria in similar situations.
- Attribution asymmetry - We tend to attribute our success to our abilities and talents, but we attribute our failures to bad luck and external factors. We attribute other's success to good luck, and their failures to their mistakes.
- Role fulfilment - We conform to the decision making expectations that others have of someone in our position.
- Underestimating uncertainty and the illusion of control - We tend to underestimate future uncertainty because we tend to believe we have more control over events than we really do.
- Faulty generalizations - In order to simplify an extremely complex world, we tend to group things and people. These simplifying generalizations can bias decision making processes.
- Ascription of causality - We tend to ascribe causation even when the evidence only suggests correlation. Just because birds fly to the equitorial regions when the trees lose their leaves, does not mean that the birds migrate because the trees lose their leaves.
See also
References
- Myers, I. (1962) Introduction to Type: A description of the theory and applications of the Myers-Briggs type indicator, Consulting Psychologists Press, Palo Alto Ca., 1962.
- Nicosia, F. (1966) Consumer Decision Processes, Prentice Hall, Englewood Cliffs, 1966.
- Simon, H. (1947) Administrative behaviour, Macmillan, New York, 1947, (also 2nd edition 1957).
