The psychology behind Mastering Shopping Decisions
Written by Ben Hartman (Top10.com)
You could be a soldier on a night patrol behind enemy lines, a pitcher on the mound in a Triple-A ballpark, or an online shopper searching for the right insurance provider, and one thing will always be a constant: Your life is a collection of countless conscious and unconscious decisions made day after day.
There has been a lot of research carried out into how we make shopping decisions in particular, mainly from the viewpoint of advertisers and marketers who want to sell us things. However, examining how we choose what to buy can also be a valuable exercise for us as consumers. By analyzing how we make shopping decisions, we can garner a little more sense about how our minds work, and how to make choices we believe in.
The 5-Stages of Consumer Decision Making
Consumer decision making is widely believed to revolve around a 5-stage process. Supported by thinkers ranging from John Dewey to Philip Kotler and Gary Armstrong, the steps in this process include:
- Recognizing a need
- Searching for information
- Evaluating the options
- Making a purchase decision
- Evaluating the decision
How does this play out in day-to-day life? Looking at each stage in a more in-depth fashion can help us better relate these concepts to our own experience as shoppers.
Stage 1: Recognizing a Need
Anyone making a decision—whether it’s a consumer decision or a career decision—must first recognize a need or desire that has to be answered. In other words, if we don’t recognize that something is broken, we’re not going to try to fix it. This can include a meal purchase brought about by hunger (need), or the purchase of a luxury item, spurred by aspiration (desire). Advertisers often try to stoke this desire and perceived need.
Stage 2: Searching for Information
When we discover that we have some sort of need or desire that must be met, the information search phase begins. When it comes to making a purchase, this can mean word-of-mouth recommendations from friends, television and print ads, or simply observing the product in our daily lives. Mainly though, when people need to research these days, they do it on Google.
Search engine queries can lead to online marketplaces and product reviews, which studies have shown can play a major part in the customer’s decision-making process. In fact, one survey from 2014 found that 88% of consumers trust online reviews as much as they do personal recommendations, and that 39% of consumers read online reviews on a regular basis. In addition, the survey asserted that 85% of consumers say they read up to 10 reviews before making a decision on a purchase.
Stage 3: Evaluating the Options
During the weighing the options stage, consumers match the products head to head, based on a wide range of variables, including price, features of the product, warranty, customer service, and the like. This is where we analyze the facts that we have discovered in the information search phase.
Many people also decide to put the decision down on paper in the form of a pros and cons list. This is also a popular feature on many online product review sites.
Sometimes nothing can take the place of just taking a break, stepping back from the screen, clearing your head and letting the decision marinate while you go for a jog or kill some time before you’re ready to come back to the purchase process.
Stage 4: Making a Purchase Decision
Once shoppers have settled on a choice, they move to the penultimate phase—the purchase stage—at which time they follow through on the decision they have made. For reasons that we will detail below, some customers get stuck at this phase, even if they have done their due diligence and their decision is backed by research.
Stage 5: Evaluating the Decision
Not to be overlooked, the final stage—purchase evaluation—is crucial for the seller and shopper alike. This is where the customer determines if they are satisfied with the purchase, if they would write a positive—or negative—review, and how likely they are to recommend the item by word of mouth. If the customer is pleased, they can potentially be a word of mouth advertiser during stage 2 of the purchase process for other shoppers.
Shoppers now have more options than ever before—and more avenues for making purchases—and the decision-making process has become more complicated. In this endless kaleidoscope of options, clarity can be difficult to attain.
Why is it So Hard for Us to Make Decisions?
During any decision-making process—be it ordering dinner at a restaurant, signing a mortgage, or deciding whether to pursue a serious relationship—we can easily become swept away in a wealth of considerations. But this internal dialogue is also the backbone of the decision-making process and the way we cover our bases to make sure we make decisions we’re happy about. When it comes to matters of the heart, our emotions can make things more complicated—fear of rejection can deter us from pursuing a relationship, and feelings of self-doubt and insecurity can drive us to talk ourselves out of shooting our shot at all.
Challenge 1: Overchoice
Anybody who has been in a grocery store in the United States knows the feeling of wandering the aisles overwhelmed by the sheer volume of options, which in the past few decades has increased exponentially. You walk in knowing exactly which brand of salsa you want, only to be faced with dozens of brands you’d never thought of or considered. In the face of such an excess of options, you may even find yourself turned off entirely.
This is what researchers term overchoice: a glut of diverse options that can make the decision-making process too complex for customers, and if you feel it from time to time, you aren’t alone.
A study carried out by the British supermarket chain Waitrose in 2015 found that 64% of customers reported feeling overwhelmed by choices at least some of the time, and that almost two-thirds feel the need to impose boundaries at home (on mobile devices and TV mainly) in order to cut down on distractions and live in the here and now.
In the 1974 research article Brand Choice Behavior As a Function of Information Load, 3 Purdue University professors found that “there are finite limits to the ability of human beings to assimilate and process information during any given unit of time, and that once these limits are surpassed, behavior tends to become confused and dysfunctional.”
In other words, shoppers only have so much bandwidth when it comes to decision making, and too much information can sometimes lead to inaction.
When it comes to decision making—know your limits. If you’re making a purchase, set a clear budget and filter out any option that doesn’t fit within it. If you’re buying a house and certain areas are not an option—eliminate them right off the top. Find any and all meaningful factors that anchor your decision, and clear out the background noise so you don’t get bogged down choosing between options that aren’t even an option for you to begin with. In other words—in a seemingly limitless world, set yourself some boundaries.
Starting your search with a curated shortlist can help you limit the choices to only the best available, and save you from having to wade through dozens of inferior options.
Challenge 2: Loss Aversion
Picture the scene—a casino floor, 30 seconds to midnight, a drink in your hand and friends on your left and right. You stroll up to the roulette wheel, put a $50 chip on red and the ball lands true. Now picture the flipside—you put down $50 and the ball betrays you, landing on black and you’re out $50.
In this “Sliding Doors” scenario, ask yourself which result has more impact—the joy of a sudden $50 you didn’t need to work for, or the irritation of knowing that in an instant you burned more than what most people make in an hour of work?
According to the principle of “loss aversion,” the anguish at losing something is greater than the joy we experience when we gain something of equal value. Loss aversion means that the fear that a big purchase could be a disappointment is a bigger motivator than the prospect that it could provide joy or satisfaction and that the the average person would rather bet nothing and have a 100% chance of avoiding loss than gamble that they could go home with some extra cash in their pocket.
For online shopping, loss aversion can be seen in the form of shoppers who are more hesitant to pull the trigger, and may need more convincing to see the benefits of one product over another—instead of focusing solely on what it will cost them.
Overcoming Loss Aversion
Focus on the positive aspects of a purchase more than the potential costs. One option is to put together a pros and cons list and really go deep on how this investment will benefit you.
A 2017 article by the Harvard Business Review stated that pros and cons lists can help make sure that you covered all your bases and considered all the critical aspects of the decision. On the other hand, these lists are vulnerable to cognitive bias and can lead to “narrow framing” that overly constrains the decision.
It’s worth noting, there is no sole consensus on pros and cons lists, with one 2006 study stating that “it is not always advantageous to engage in thorough conscious deliberation before choosing,” and that when it comes to complex matters, they should be decided by unconscious thought.
Challenge 3: Subconscious Biases
There are many methods that companies selling products and services use to influence you in ways of which you are unaware.
For instance, color has been known to play a powerful role on consumers at the point of purchase. In Satyendra Singh’s “Impact of Color on Marketing,” the University of Winnipeg professor explains, “People make up their minds within 90 seconds of their initial interactions with either people or products. About 62‐90 percent of the assessment is based on colors alone. So, prudent use of colors can contribute not only to differentiating products from competitors, but also to influencing moods and feelings—positively or negatively—and therefore, to attitude towards certain products.”
Kanye West famously said that he sometimes gets emotional over fonts, and laugh all you want, but he’s not alone. In Kevin Larson and Rosalind Picard’s “The Aesthetics of Reading,” the authors argue that font can directly affect how people feel and “find that good typography can induce a good mood.”
Instant, opaque customer reactions were covered in psychologist Daniel Kahneman’s award-winning 2011 book “Thinking, Fast and Slow,” in which he described what he termed “System 1” and “System 2” thinking. System 1 is unconscious, quick thinking, while System 2 is slower, more deliberate and takes more effort.
System 1 thinking comes into play with online purchases that are made quickly and are related to unconscious, instant conclusions, such as when a buyer sees a logo of a brand they trust.
System 2 thinking is more involved, relating to more complex considerations about which product to purchase, or for more significant purchases, such as buying a house.
The prominence of System 1 or System 2 thinking in the decision-making process depends on the product in question and the person looking to make a purchase. If someone is looking to attract a more instant, emotional connection to their product, then appeals to System 1 thinking is the way to go.
When it comes to decision making, it’s hard to pinpoint a single main motivator, but in an interview with Top10.com, Stanford Professor of Marketing Itamar Simonson stated that “the order in which consumers encounter the options online often makes a big difference.”
Simonson added that “by and large, options encountered early in the process tend to have the advantage in terms of choice likelihood.”
Overcoming Subconscious Decision Making
It’s hard to overstate how powerful the subconscious mind is in decision-making. Harvard Business School Professor Gerald Zaltman, the author of How Customers Think: Essential insights into the mind of the market and Unlocked: Keys to Improve Your Thinking, asserts that as much as 95% of purchase decision making takes place in the subconscious mind and is affected by key unconscious judgements.
It’s difficult to calibrate where and when unconscious emotions and considerations affect us, but knowing is half the battle. Once you’re aware of the fact that unconscious considerations are affecting your choices, then you can better take a step back and realize that not every preference is purely objective or based on the nuts and bolts of the item on sale.
One of the arguments the 2017 Harvard Business Review article made in defense of pros and cons lists spoke to the importance of getting some sunlight between you and your unconscious mind. The article stated that making pros and cons lists can help you gain “emotional distance” from the decision, allowing you to step back and not be so swayed by emotional or gut reactions.
With so much of our decision-making coming down to unconscious preferences and gut feelings, it is important that you set up concrete, real-life parameters around your decision. When it comes to making purchases, find the concrete factors—price, features, warranty—that favor one product over the other, and give them a central place in your decision-making process.
You should also find counsel in third-party, unbiased sources of information. Find objective articles online that compare different products and see how they stack up side-by-side. Speak to people who may have prior experience and can give you some guidance, and then weigh these tangible factors against your own gut instinct and feelings about particular decisions.
Be informed, know how your mind works—and do what’s best for you
If you can’t decide whether to make a relationship exclusive, if you should sign that mortgage, or if you’re just unable to pull the trigger on an online purchase, don’t worry, it’s not you—it’s all of us. Every waking hour of our lives involves conscious and unconscious decision making, from matters of life and death, to checking for yourself if using chocolate milk on your cereal is really as bad as it sounds.
Circle back to that first step of the process—the need that you are trying to address—and then focus on what’s important to you, and make a decision that’s in your best interests. Don’t shut out your unconscious or your emotions entirely, but make sure not to let them override the practical considerations behind your decision. And at the end of the day, you should be able to make a decision that works great for you.