Do Consumers Really Make Rational Decisions - Essay Example

?Do Consumers Really Make Rational Decisions? Success of any business depends on the reaction of the consumers to the products or services offered. Consumers are the judges that can make or break the profitability of the said products or services depending on the choices they are making. The paper is aimed to answer the query if consumers really make rational decisions in terms of the availing different items in the market. Basically, the logical answer to the question is yes consumers really make rational decisions but the most important issue is that they tend not to do that at all times. In the research undertaken then, the specific objectives revolve around the presentation of the different issues and factions that can affect the decision-making process of the consumers in their choice of products and services available in the market. Background of the Study To be able to answer the question regarding the rationality of the choices made by the consumers, it is important to explore the issues related to the decision-making process of the consumers. There are different internal and external factors that can affect the choices of the consumers. The internal factors of a consumer include factors in his or her psychological core such as motivation, ability, and opportunity; exposure, attention, and perception; knowledge and understanding; attitude formation and change, memory and retrieval. These factors comprise the core values of a consumer which can affect the decisions that he or she makes. In addition to these factors, the external aspects or the consumer’s culture also contributes to the choices made. The external parameters are composed of the consumer diversity, the social class and household influences, the psychographics or the values, personality, and lifestyles, and the social influences. Through the interaction of the internal and external factors, the decision-making process can be completed (Hoyer and Macinnis, 2009, p.193). The Phases in Decision-Making Process To be able to determine the rationality of the choices made by the consumers, it is important to know the process by which a decision can be made. Recognition of the Problem or the Need The first phase in the decision-making about what product to buy or services to avail is the recognition of the problem and the search of information related to the problem. The problem can be equated to the need of a consumer which can only be answered by a particular product or service. This need also dictates the possible outcome of the decision-making process. The needs of a consumer can be defined by the necessities of the daily existence (Mullen and Johnson, 1990, p. 91). One paradigm that presents the basis of a consumer’s needs is the Maslow’s hierarchy of needs which defines the consumer behavior as an effect of the human needs. The said needs then are considered as “underlying factor of consumption” which are classified into physiological and psychological needs. Physiological needs are for survival thus considered basic and found at the lowest level of hierarchy. This is followed by another physiological need which is the safety needs such as shelter and insurance. The next levels consecutively comprise the psychological needs such as belongingness and love needs; need for esteem; and self-actualization needs (Jansson-Boyd, 2009, p. 119). By tapping any of the said needs different companies and business can generate profits. Although this is one of the basic factors, the consumers’ needs are only considered as one of the many factors that contribute to the complicated web of interaction to come up with the client’s choice. Actual Process of Decision-Making It is important to consider that the said needs are the stimuli that can lead to the decision of the client to buy a particular product or avail a particular service offered. Once the need of the client had been recognized, it leads to the second level of the decision-making process which is deciding whether to buy a product or not. It is important to consider that the act of targeting a product can come from the client due to his or her urgent need but this is not the only scenario. Another case, which can be observed in advanced technological gadgets such as mobile phones and computers, these innovative products introduced in the market can create that need which the consumer can decide on whether to satisfy it or not. The said level of the decision making process can be considered as the core level since it is the phase where the consumer considers pertinent factors that are related to his or her motivation, ability and opportunity can lead to his or her decision. (Hoyer and Macinnis, 2009, p. 46). Motivation is an important driving force not only in the process of decision-making but in the totality of the producer and consumer relationship. It is defined by the three features of the concept namely direction, effort and persistence of the person. Direction is equivalent to a person’s goals. If the products or the services available in the market can help the consumer achieve his or her goal, the client can decide in favor of the products or services. Effort can be related to the willingness of the consumer to purchase a product or service regardless of hindrances e.g. finances. Persistence can be perceived in situations wherein the loyalty or the willingness of the client to wait for the product or service in case on non-availability or similar scenarios (Jansson-Boyd, 2009, p. 115). Motivation can be affected by factors such as personal relevance to self-concept, values, needs and goals. Other pertinent factors include perceived risk and moderate inconsistency with attitudes. Basically, in the process of motivating the client, there is a limited action or influence that a company can do because the main process of decision making can be considered as significantly internal and affected largely by the factors within a consumer’s well-being (Hoyer and Macinnis, 2009, p. 46). In addition to motivation, ability and opportunity can greatly affect the choices made by the consumers. Ability is the ‘extent of the consumer’s capacity to achieve an outcome’ which in this particular issue is availing a product or service. It is the next level needed to be undertaken by the client after being motivated, thus, if motivation is the drive to achieve a goal, ability determines the actions needed to be undertaken to be able to achieve such goal. Ability of the consumer can be influenced by the product knowledge and experience, cognitive style, complexity of information, intelligence, education, age ad monetary resources. These factors can serve as important bases for the producers and marketers to be able to reach the target market and the specific consumers. For example, by providing clear and comprehensive information that the client can relate based on their experiences, cognitive style, intelligence level, education, age and monetary capacity, a product can thrive in the market. In the present era for example, mobile phones are still considered as the main trend. Upon observation, it can be determined that producers are able to target specific clientele by focusing on their needs and abilities. There are mobile phone models for different ages, for different careers, and for different interests (Hoyer and Macinnis, 2009, p. 62). In terms of the opportunity, consumers’ decisions can also be affected by factors such as time, distractions and the amount, repetition and control of information. Time can significantly influence the decision of the consumers. The decision that a consumer makes in leisure-time consumption is different from the decisions he or she makes when there is pressure due to time constraints. If time is a limiting factor it can lead to different effects. One is less information processing which can lead to shallow product judgment. Another effect is that due to less time, the main basis of the consumer’s decision is based on the natural cognitive process which is analysis of negative information which can lead to rejection of brands based on flaws. This is in contrast to the normal cognitive process wherein there is a comparative analysis of the positive and negative attributes of a product or brand that serve as the basis for arriving at a decision on buying a product or in what brand to purchase (Hoyer and Macinnis, 2009, p. 65). Another factor included in the opportunity is the distraction that can lead to ignoring the information about the product or service presented through different media. The factor of distraction can clearly define the priorities of the consumer. An example commonly given is the distraction from a television due to more pressing matter. Another example that can be given which is related to the priorities as well as the values of the consumer is not following the fast food trend due to the priority of maintaining a healthy lifestyle. Regardless of the different information input from different media, a consumer with such values can always follow the distractions away from the trend in the market towards his or her priority to maintain healthy diet above all else (Hoyer and Macinnis, 2009, p. 65). It is already an accepted notion that the availability of information can change the decision of the consumer regarding purchasing a product or service. The amount, repetition, and control of information are also included in the factors that can affect the choice of the consumers based on the opportunity of achieving information regarding the product. The marketers are known to maximize the influence of these factors to the process of decision-making of the consumers. By using different forms of mass media, e.g. television, world wide web and internet, etc., the different producers and companies are manipulating the amount, repetition, and control of information that can help achieve higher profits (Hoyer and Macinnis, 2009, p. 65). Decision-Making Output and Result After the interaction of the different factors that can affect the choices made by the consumers, the intention and behavior serves as output or consequents of the internal decision-making process undertaken regarding particular products or services. Intention can be defined as the connection between the recognition of stimulus and the internal processes of a consumer and the end result which is the acquisition or use of a particular product. This means that without the prior process, there would be no intention of purchase. When intention had been established though, one way of determining the outcome of the decision-making process is through behavior. Positive indication is that the consumer will purchase the product while the negative indication is that the consumer will not buy a product or choose an alternative product or brand. Behavior then is the ultimate result and determinant of the internal process and assessment of the consumer. For that matter, it is also the indication of the rationality of choice being made (Mullen and Johnson, 1990, p. 106). Types of Consumer Decision-Making The different types of decision-making are also pertinent in the determination of the rationality of the choices made by the consumers regarding products to buy or services to avail. There are four basic types of consumer decision-making which are categorized on the basis of two parameters namely involvement and information processing (Kardes, Cronley and Cline, 2010, p. 182). The first type of decision-making is referred to as brand laziness which is applied to commodity products. It is referred to as brand laziness due to the fact that familiarity and convenience are more important than the brand commitment. It can also be related to the comfort of having no pressure of buying items and commodities for daily consumption. It is described to be the type of decisions which “lack interest, risk and emotions. This type of decision-making can be considered as irrational for the consumers based on the low level of involvement and low level of information processing (Kardes, Cronley and Cline, 2010, p. 184). Brand loyalty is the second type of consumer decision-making which is based on the benefits and values achieved in buying a particular brand. It is particularly applied to self-enhancing products. As compared to brand laziness, the said type of decision-making done by the consumer requires high level of involvement and low level of information processing. Although the choices are made in a recurrent manner, there is still an active involvement and analysis. The reason why there is low level of information processing is because the consumer already knows the product and the decision of buying it again is based on his or her past experiences (Kardes, Cronley and Cline, 2010, p. 184). The third level of decision-making is referred to as variety seeking. This can occur when the consumer wanted low involvement in the choosing products but with high level of information processing. The said process is applied for parity products. A consumer may know the specifications of a product he or she needs but still deciding on what brand to choose which can be determined during the time of purchase or even prior to that. There are different scenarios that can serve as examples to the said process. One is when a consumer wanted to buy a product he or she is not familiar with but had researched information about. The choices then would be available in the market. The second scenario is when the consumer already tried a particular product and wanted to find a replacement due to different unsatisfactory reasons e.g. decrease in performance. It is then described as the opposite of brand loyalty (Kardes, Cronley and Cline, 2010, p. 185). The fourth and highest level of decision-making undertaken by consumers is referred to as problem solving which needs high level of involvement and high level of information processing and applied for complicated and big-ticket items. There are different steps involved in the problem solving decision-making process such as problem recognition, information search, evaluation of alternatives, purchase decision and post-purchase evaluation. It can then be considered that the said type of process is the complete way a consumer needs to apply for a rational decision in purchasing a product and availing a service (Kardes, Cronley and Cline, 2010, p. 189). These are the different types of decision-making processes applied by consumers in the market. By determining these concepts, the rationality of the consumers’ decisions can be evaluated and analyzed. Rationality of the decisions of the Consumers Based on the decisions undertaken then, do consumers really make rational decisions? The answer is yes they do specifically when there is a high level of analysis, involvement and information processing involved. A serious process of decision making is required since the decisions and choices made by the consumers are affected by complicated interactions of different intrinsic and extrinsic factors. Purchasing a product is composed of challenging and complicated decisions that are needed to be undertaken by consumers in their everyday life. For that matter, it is expected that both rational and irrational decisions are made (Jansson-Boyd, 2009, p.138). The answer to the query is then yes, consumers really make and are capable of rational choices and decisions but they do not always do so. There are two main logical reasons why consumers do not always make rational decisions. One is the practicality of applying complicated and very detailed analysis involved in decision-making. Based on the types of decision-making processes undertaken by consumers, all 4 types are needed to be able to survive each day and comply in every responsibility he or she has. It is important that in simple commodities like what a consumer needs in his or her daily life, not too much time would be allotted in the decision-making. Brand laziness then is the most irrational type of decision-making process applied by a consumer but it has its own benefits which are faster result and less waste of time. Another reason is the complicated mesh of factors which had been discussed. Buying a product can be superficially simple but it involves emotions, cognitive process and even the guidance of values, culture and traditions. For that matter, regardless of how low the involvement and the information processing a consumer invests in the decision-making, it can still be considered as a complicated choice and decision (Kardes, Cronley and Cline, 2010, p. 184; Oysermana, 2009, p. 276). Conclusion Based on the study undertaken, the answer to the query is yes, consumers really make rational decisions. This can be attributed to the fact that no matter how simple the decisions and choices regarding a product or service is made, it still involves a complicated process of cognitive, emotional, social and cultural analysis. The only difference is how much time in terms of involvement and information processing a consumer invests in a particular decision. If the level of effort can be equated to the level of rationality, then the purchasing of products such as basic commodities which are undertaken in an automatic notion with less analysis put in can be considered as the least irrational decisions while the purchasing of important and expensive products that require greater involvement, time and effort in analysis can be considered as the most rational decisions. Bibliography Hoyer, W.D. and Macinnis, D.J. (2009). Consumer Behavior. Cengage Learning. Jansson-Boyd, C.V. (2009). Consumer Psychology. McGraw-Hill International. Kardes, F.R., Cronley, M.L. and Cline, T.W. (2010). Consumer Behavior. Cengage Learning. Mullen, B. and Johnson, C. (1990). The Psychology of Consumer Behavior. Routledge. Oysermana, D. (2009). Identity-based motivation and consumer behavior. Journal of Consumer Psychology, 19.3 (July 2009): 276-79. Read More