How To Research The Irrational Consumer

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by Michaela Mora Follow Me on Twitter Here

The Irrational Consumer

 We, as consumers, don’t always do what we say. This is a fact that market researchers have to wrestle with in the design phase of any research project. As Jeffrey Henning pointed out in his recent article, Respondents as Economic Actors: Behavioral Economics & MR, some schools of economic thought have been drawing attention to the inadequacy of the rational choice theory, which assumes that consumers have perfect information about all the alternatives and weigh in pros and cons before making a purchase decision.

Although sometimes this may be true for certain purchase decisions in product categories a consumer values and is engaged with for a variety of reasons, many times consumers make decisions with incomplete information or simply skip the evaluation of options and make impulse purchases or go with what is available.

Henning summarizes the situations where, as behavioral economists have pointed out, actual behavior doesn’t match the rational approach to decision making. These are:

  • Rules of thumb: Here consumers rely on heuristics or rules of thumb as shortcuts to decision making. They don’t take into account all possible options and may not make optimal decisions, but their decisions are “good enough.” This may be due to information overload, too many options, time constraints, financial situation, and lack of category involvement, among other factors.
  • Emotional arousal: Consumers sometimes make purchase decisions influenced by their emotional state. If the person is calm she is more likely to think through her purchase decision. However, if the person is experiencing strong emotions (positive or negative), they are more likely to succumb to impulse purchases without much thought of the long term consequences.
  • Framing: The context often influences purchase decisions in ways consumers may not be aware of. We often compare products to others that are present, particularly on price. The same product may look like a good value at one store or terribly expensive at another depending on competing alternatives and our expectations. Store atmosphere, layout, music, scents, in-store advertising can invite or discourage consumers to buy. For online retailers, the website design, layout, navigation path, graphics, type and amount of information, and trustworthiness indicators, among others, provide a context that influence our decision to buy from a particular online retailer.
  • Cognitive biases: As Henning puts it, “individuals overvalue items they own (the endowment effect) or have invested in (the sunk-cost fallacy),” and tend to feel losses more intensely than gains (this may explain why for some, paying for shipping feels worse even if the cost of shipping may be compensated by a price discount). We often assume that others think like us, but are also influenced by the decisions of others (e.g. recommendations by word-of-mouth). We also seem to be wired to think short-term and have a hard time resisting instant gratification, which may interfere with rational decisions that would be more beneficial to us in the long run.

We can probably find these situations in many categories and some are likely to be more prevalent than others. In my opinion, in order to tackle this problem from a research perspective, we first need to understand how consumers make purchase decisions in a particular product category and identify potential segments with different decision making approaches.

For instance, a consumer may consider clothing detergent a commodity and buys whatever brand is on sale at the time of purchase, while another browsers the detergent aisle, opening bottles to check for fragrance, and reading packaging labels searching for harmful ingredients for herself or the environment. The key is segmentation within product categories based on purchase decision approaches.

To capture the nuances and situations influencing purchase decisions, we can’t rely only on traditional concept tests or focus groups. These need to be combined with methods that go deeper and allow us to understand consumer emotions, purchase context, cognitive biases and rules of thumbs. Some of the research techniques that are useful for these purposes are:

  • Adaptive Choice-Based Conjoint analysis: Consumers are asked to build their own product based on a set of criteria, information that is used to understand the rules they use to choose products (must-haves and unacceptables) and to present relevant alternatives they would actually purchase.
  • Shop-alongs: We go along with consumers in their shopping trip and observe how they make purchase decisions, what the motivators are, how the context influence their decision, the role of emotions, etc.
  • Mystery shopping: Consumers get immersed in a shopping occasion and report back their personal experience with different aspects of the purchase occasion.
  • Journaling about experiences: Consumers report about their experience with products and services in a journal format using text, video or pictures as the experience progresses.
  • Ethnographic interviews: Consumers are interviewed as they carry on different tasks or use products in real time and environment.
  • Mobile surveys in real time: Consumers are asked about their immediate and current experience, feelings and opinions via text messages.
  • On-site observation: Acting like a fly on the wall, we can watch how consumers buy and use the products and integrate them in their daily life.
  • In-Depth interviews: We delve deeper into purchase drivers, cognitive biases, situational factors, etc. Projective techniques can be used to uncover motivators not consciously recognized.
  • Neuromarketing research: We use neuroscience, psychology and other cognitive science techniques to study consumer responses to marketing stimuli and products. Some of the responses measured include eye tracking, heart rate, electroencephalography – EEG, functional magnetic resonance imaging – fMRI, galvonic skin responses, etc.

If you want to understand the gap between what consumers do and say, don’t rely only on one research methodology, as each research method provides data that reflect only a few facets of the consumer.

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