How Do Consumers Make Choices?

A nice survey by Zakaria Babutsidze of United Nations University.

In this paper I review the evidence from marketing and psychology literature about the purchase behavior of consumers. I concentrate on the characteristics of the choice process, choice of the external information source and nature of the  information obtained from these sources. The impact of important systematic differences among consumers and products on choice behavior is also discussed.

Summary is consumers are different (irrational) and complex. They use heuristics and decisions differ across products. On durables, they spend more time gathering information and so on:

Overall conclusion from the discussion is that consumers are different from each other and that every of them goes through fairly complicated choice process every time she wants to buy a product. This choice process has several (most commonly – two) stages. Every consumer processes some amount of information, which consists of information acquired through personal experience and external information. Based on this processed information they usually construct heuristics for choice. This heuristics is sometimes simple, but sometimes complicated (depending on the characteristics of the consumer and the product).

There are several external information sources and consumers have different reliance levels on information obtained through these different sources. Consumers are putting certain level of effort in collecting and analyzing external information and combining it with their own,‘internal,’ information. Consumers are also communicating the information they have further, to other consumers. The information consumers exchanging with each-other is usually in form general personal evaluation of a product. Furthermore, consumers’ behavior consistently differs depending on whether they have lot of or no experience with the product they are willing to purchase and also depending weather the product under consideration is durable or nondurable.

It is a nice literature survey. Though could have written simpler. There are too many names to remember..

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