13.3 Heuristics and Decision Rules in Consumer Choice

Heuristics are mental shortcuts consumers use to simplify decision-making. These rules of thumb help people make quick choices without extensive cognitive effort, especially when faced with complex or unfamiliar options. However, heuristics can lead to biases and suboptimal decisions.

Common consumer heuristics include availability, representativeness, and anchoring. Marketers can leverage these shortcuts to influence consumer behavior by designing products, packaging, or ads that trigger specific heuristics. Understanding these mental shortcuts is crucial for effective marketing strategies.

Heuristics in Consumer Decision Making

Role of heuristics in decision-making

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• Mental shortcuts or rules of thumb simplify decision making
• Allow consumers to make quick decisions without extensive cognitive effort especially useful when faced with complex or unfamiliar choices (buying a car, choosing a college)
• Can lead to biases and suboptimal decisions may cause consumers to overlook important information or alternatives (focusing on brand name instead of product features)
• Marketers can leverage heuristics to influence consumer behavior by designing products, packaging, or advertisements to trigger specific heuristics (using attractive models to trigger representativeness heuristic) and simplifying decision making process to encourage desired choices (limiting options to reduce cognitive effort)

Common consumer heuristics

• Availability heuristic consumers judge likelihood or frequency based on ease of recall more easily remembered events or information perceived as more common or probable (overestimating risk of plane crashes due to media coverage) recent or emotionally salient experiences have greater impact on decisions (choosing a restaurant based on a memorable meal)
• Representativeness heuristic consumers make judgments based on similarity to stereotypes or prototypes products or brands that fit consumer's mental image of a category are preferred (associating eco-friendly packaging with high-quality products) can lead to overreliance on surface-level characteristics and neglect of base rates (assuming a well-dressed person is successful)
• Anchoring heuristic consumers rely heavily on initial piece of information (the anchor) when making decisions subsequent judgments are adjusted from the anchor, often insufficiently (estimating product value based on first price seen) initial prices, product attributes, or recommendations can serve as anchors (using a high-priced item to make other items seem more affordable) even arbitrary or irrelevant anchors can influence consumer judgments (random number affecting willingness to pay)

Decision Rules in Consumer Choice

Decision rules for consumer choice

• Compensatory decision rules consumers consider all relevant attributes and make trade-offs among them a high score on one attribute can compensate for a low score on another (choosing a car with lower fuel efficiency but more advanced safety features) requires more cognitive effort and time than non-compensatory rules examples: weighted adding rule, equal weight rule
• Non-compensatory decision rules consumers eliminate alternatives that fail to meet certain criteria a high score on one attribute cannot compensate for a low score on another (rejecting a phone with a low-resolution camera regardless of other features) simplifies decision making by reducing number of alternatives considered examples: lexicographic rule, elimination-by-aspects rule, conjunctive rule

Leveraging heuristics in marketing

• Design products and packaging to trigger availability heuristic use vivid, memorable images or slogans to increase ease of recall (catchy jingles, distinctive logos) encourage word-of-mouth and social media sharing to increase exposure (incentivizing customer reviews and referrals)
• Position products as representative of desirable categories emphasize attributes that fit consumer's mental image of an ideal product (highlighting a car's sleek design and advanced technology) use packaging and branding to create associations with positive stereotypes (using green colors and natural imagery for organic products)
• Set anchors that favor the marketer's products use high initial prices to make subsequent discounts appear more attractive (marking up prices before a sale) provide product recommendations or default options that serve as anchors (featuring a high-end model to make others seem more reasonable)
• Simplify decision making process to encourage use of non-compensatory rules highlight key attributes that are likely to be used as elimination criteria (emphasizing a laptop's battery life and portability) reduce number of alternatives or attributes to minimize cognitive effort required (offering a curated selection of top-rated products)
• Provide information that facilitates use of compensatory rules make attribute information easily accessible and comparable across alternatives (using a comparison chart or tool) emphasize unique benefits that can compensate for weaknesses on other attributes (focusing on a phone's exceptional camera quality to offset lower battery life)