What we know about consumer decision making

10 min read

WARC Best Practice, December 2021

Consumer decision making is a surprisingly complicated issue to

research as much of it is completed sub-consciously, it is instinctive
and based on a series of subtle heuristics and bias. Cultural
background and interest in the category will influence the decision
making at various points across the path to purchase. Brands are
advised to use decision making analysis to ensure that the choices they
offer the consumer are timely and genuinely useful, that they aid
rather than inconvenience the consumer.

Definition

Consumer decision making is the process by which consumers identify

their needs, collect information, evaluate choices, and, finally, make a
purchase decision. These actions are determined by psychological and
economic factors and can be influenced by environmental factors such as
cultural, group, and social values.

Key insights
1. Consumer decision-making is complex and adaptive, along a mindful to mindless continuum

Market research company Ipsos has challenged conventional wisdom

about System 1 and System 2 thinking with a new model that outlines the
complex and adaptive nature of the decision-making process. It argues that
decision making is not simply automatic or deliberative but adaptive,
based on what is going on around and within people; that decisions occur
along a continuum, where multiple cognitive processes ranging from more
mindful to more mindless are working at the same time. Furthermore,
decision-making is regulated by an adaptive control process in the brain
that can dial up more deliberative processing as required. This is deeply
influenced by the context in which decisions are made, as well as by goals,
prior associations, and experiences stored in memory.
So while brand choice is often more mindless and makes use of shortcuts,
in many cases, more mindful choices take over – triggered by context,
motivations, emotions, values, or past experiences. Brands can influence
these decision-making processes by triggering ‘conflicts’ that challenge
more automatic, mindless choices, or through interventions that disrupt
someone’s automatic impulse, cause them to pay attention, and encourage
a more mindful and possibly different choice. Understanding the ever-
changing cultural context and influencing choice through brand
perceptions, experience and identity are key.

Read more in: Dancing with duality: Achieving brand growth in a mindful
and mindless world
2. ‘Mental availability’ aids decision-making for both ‘maximising’ and ‘satisficing’ shoppers

‘Mental availability’ – a brand’s accessibility from memory across the

range of situations and needs buyers in a category encounter - is a central
tenet of Byron Sharp’s theories of how brand grow. Research into the
psychology of online and offline shopping found that it matters more than
ever. Online shopping encourages ‘maximising’ decision-making – where
people compare lots of options to seek out the best one, but this can lead to
‘choice overload’. Brands, including retail brands, help online ‘maximiser’
shoppers by reducing risk and uncertainty in the absence of physical
sensory clues and shortcutting decision-making. Brands also help
‘satisficing’ consumers looking for a ‘good enough’ purchase by reducing
effort. In either case, strong mental availability helps shoppers feel
confident and in control.
Read more in: Does mental availability matter in the digital age?
3. Six key biases can influence online purchase decisions

Google and The Behavioural Architects set out to study how consumers
choose to buy one product over another in an online environment of
“abundant choice” and “limitless information”. The study was
underpinned by six key biases identified by behavioural science as
influencing purchase decisions:

• Category heuristics– key product specs that simplify decisions

• Power of now– the longer you wait, the weaker the proposition
becomes
• Social proof– the power of others’ recommendations
• Scarcity bias– as availability decreases, desire increases
• Authority bias– trust and expertise can sway decisions
• Power of free– a free, even unrelated, gift with a purchase is a
motivator

The study included a shopping simulation which varied how brands were
represented based on the six biases and results clearly showed how easily
brand preference could be shifted by applying the biases, as the online
environment makes it easy to be curious and explore options with just a
click.
Read more in: Navigating the ‘messy middle’ of online consumer decision-
making and Decoding decisions: Making sense of the messy middle
4. Behavioural triggers that address key barriers help shoppers make a purchase decision
Latent brand equity does not guarantee brands are bought, or even in the
consideration set once people are in front of the shelf where 70% of
purchase decisions are made. Brands understand the importance of
investing in awareness but often forget to create a behavioural trigger,
without which conversion does not happen. This behavioural trigger
establishes the role brand plays in people’s lives and makes it relevant for
them. Without it, a brand is just another choice in a sea of interchangeable
options. The success of shopper marketing lies in creating an integrated
idea with a clear, memorable engagement mechanic that is, at its heart,
linked to purchase e.g. Share a Coke. To create a suitable trigger, brands
should look at the five key barriers to purchase:

• Time: personalisation triggers make time spent with the brand

meaningful and rewarding.
• Convenience: physical triggers can help address the challenges of
today’s shopping experience by understanding and anticipating
friction in the main touchpoints of the journey (e.g. search, access,
self-service, subscription, payment, delivery, etc.) and providing the
right information, right solution at the right time on the right
platform.
• Relevance: occasion-based triggers rooted in specific moments of
consumers’ lives can help increase relevancy and meet individual
shopper demands.
• Trust: Social proof can serve as a commitment trigger that is very
important for overcoming a trust barrier and helping consumers
make a final purchasing decision. This can take the shape of
recommendations from customers, employee advocacy, influencer
reviews, or even celebrity endorsements.
• Emotional connection: association triggers can create emotionally
engaged consumers who are less price sensitive, less likely to buy
from competitors, and three times more likely to recommend and
repurchase.

Read more in: How to make shopper marketing more effective

5. Too much choice can hinder consumer decision-making about ‘utilitarian’ products

The idea that consumers are always paralysed by an excess of choice is too
simplistic – choice overload depends on the type of product or service
being purchased. A study found people tended to demand and prefer more
choice when searching for and choosing a ‘hedonistic’ product than they
did for ‘utilitarian’ products. Utilitarian products typically include
necessities such as detergents, toilet roll, milk – but can also include
family cars and laptops – which tend not to generate much emotional
response in the buying process. Hedonistic products are nice-to-have items
that generate an emotional response and pleasure – such as perfumes,
designer clothes, jewellery, and sports cars. Utilitarian purchases are also
more open to ‘satisficing’ where picking an option that is ‘good enough’
may be the best option for many people. But even then, the concept of
‘good enough’ will vary from one person to another.
Read more in: New Frontiers in Behavioural Science: When is Choice a
Paradox? The evolution of choice theory
6. Creating effortless decision-making processes has been key to tech giants’ success

The application of behavioural science to create experiences that cost

consumers the least cognitive effort has been central to the success of the
FANGs (Facebook, Amazon, Netflix and Google). Techniques such as
auto-completing queries and the use of recommendation engines are
derived from aspects of behavioural economics like System 1 thinking,
heuristics and choice satisficing. Creating the right experiences has been
the result of constant, real-world consumer testing. Even something as
simple as the shade of blue used to show results in the Google toolbar is a
result of testing over 40 different shades to see what generated the most
clicks. This optimisation is estimated to have generated over $200m in
additional annual revenue.
Read more in: How Amazon, Netflix and Google use behavioural science
to simplify the user experience
7. Taking unconscious biases into account can improve communication effectiveness

There are a multitude of unconscious biases that influence everyday

decision making. Understanding and using the existing learning about
them can help marketers work with the grain of human nature to make
better marketing decisions and create more effective communication, as
De Beers have done with diamonds.
When it comes to everyday communications, it’s suggested that seven
tools based on unconscious biases are key to optimisation – choice
architecture, salience, anchoring, framing, chunking, cognitive ease and
social norms. These can be applied using a four-step process:
 • Defining the desired behavioural response
• Analysing the context in which communication will be received,
read and acted upon
• Audit and optimise communication through a behavioural science
lens, particularly utilising the seven tools
• Pilot and test the optimised version

Read more in: Richard Shotton: why strategists must understand the
science of consumer choice, Seven key behavioural science-based concepts
for optimising everyday communications and How to apply behavioural
science to build more effective everyday communications
8. Most decisions are made quickly, using intuition not considered reasoning

Psychologist Daniel Kahneman has identified two mental systems people

use to make decisions: System 1 which is fast and largely intuitive and
System 2 which is slower and takes more effort. Most decisions are guided
by System 1 and confirmed by System 2. Most System 1 decisions are
good enough but are often influenced by unconscious biases. System 1 is
hugely affected by the environment and actions of other people, rooted in
experience and habit, and strongly guided by how people feel. System 2 is
highly attention-driven and requires effort to process information, so
people try to avoid it. It’s important to remember that System 1 and 2 are
not separate processes but are complementary and work in tandem to
produce more effective and efficient decision-making.
Read more in: System 1 and System 2 thinking – Debunking myths and re-
establishing truths
9. Mental short-cuts and instincts dominate consumer decision making

It is important for brand owners and agencies, to remember that you think
about a brand, it's appeal, competitive context and technical detail, far
more thoroughly than a consumer will ever do. Yes, there will be category
enthusiasts who engage with the detail, who seek to optimise their choice,
but for most consumers, in most categories, the decision will be made
using some form of 'short-cut', a heuristic or instinctive bias. Research
from Germany shows that these 'shortcuts' are hugely important, but they
aren't random, they are created by instincts that are developed through
exposure to relevant messaging across brand touchpoints.
Read more in: First Impressions Count: The power of instant meaning for
brand decisions
10. Emotional advertising is effective by tapping into how the brain makes decisions

Market research company System1Research have found that consumer

emotional responses to an ad explain its business success. They tested
campaigns for which there was business effect data – from UK industry
body the Institute of Practitioners in Advertising – in their pre-testing
system, which gathers emotional response, and found those with a greater
emotional response produced more very large business effects. Emotional
advertising can create memories of good feelings about a brand that act as
a quick mental shortcut which influences future decision-making.
However, others argue that while emotional communication is an effective
vehicle because it can increase attention, recall and sharing, to influence
consumer decision making and drive actual sales it needs also to speak to
the consumer’s motivation – their desires, needs, goals or ‘jobs to be
done’.
Read more in: Marketing from the heart for growth and How emotion
really works in advertising
11. Culture influences consumer decision making

Having established that consumers employ short cuts when making

decisions it is worth acknowledging the role that local culture will play in
the creation of bias. It seems reasonable to assume that consumer
perception of issues such as cost or aversion to loss, would be fairly
similar the world over – influenced perhaps by wealth and price of the
item but little else. However, research across 11 very culturally diverse
countries shows that perception of risk and loss is hugely influenced by
culture with responses varying by as much as 30%. Much of the existing
research around behavioural economics is skewed towards Western
economies and brands are advised to ensure that strategies are culturally
adapted.
A study, using an open-ended text analytics methodology, asked
consumers to evaluate their shopping decisions across a number of mostly
FMCG categories in seven global markets. It found several cultural
differences. For example, in the USA, and to some extent the UK,
decisions were more driven by individual wants and needs, while in India
and Singapore social influences and friends were stronger. In Spain, and to
a lesser extent in Brazil, India and Mexico, the consumer’s mother was an
important factor. It also showed different purchase drivers in different
product categories across the markets.
Read more in: Globally irrational, locally rational? Localising
behavioural economics for the Asian market and Is shopping cultured? An
exploration into the global language of consumer decision making
12. Decisions are taken at many different points along the customer journey

A great deal of consumer decision making analysis focuses on one specific

touchpoint be that in-store, online or elsewhere. However, because the
modern path to purchase is hugely iterative and inter-related, there is
evidence to suggest that looking at touchpoints in isolation is misleading.
By looking at multiple touchpoints there are more opportunities to
understand the context of the decision, the influence of issues such as
competitors and emotion – to create a richer picture to inform future
planning. One significant barrier to this happening is the silos in which
brand teams often still operate within, a focus on their KPIs rather than the
customer journey.
Read more in: The power of perception: Creating value through
integrated touchpoint management
13. Brands can assist consumer decision-making by accounting for the nature of the category

People organise categories around risk and reward – what’s at stake in

making brand choices and how much enjoyment they get from it. This
creates four category types – routine, burden, passion and entertainment –
with different patterns of decision making. Decision journeys will vary in
length, touchpoints, motives, perceived social engagement and the role of
emotion and cognition. Passion categories i.e. vacations, organic food or
designer clothing involve high emotion and cognition. Burden categories,
such as insurance, tyres, banks and tax preparation services, tend to induce
negative emotion and slow thinking, while entertainment sectors i.e. beer,
cookies, coffee shops and confectionery tend to induce positive emotion
and fast thinking. Routine categories such as deodorant, batteries and trash
bags involve some positive emotion but little thinking.