The Non-Rational Decision Making of Consumers

Prior to the research of Howard Moskowitz, spaghetti sauce was sold in one variety with two dominating brands: Prego and Ragu. Marketers in the 1970s believed the consumer packaged goods industry was a competition to create the best product possible, the most preferable by all consumers, in that category. Moskowitz created a revolution in the industry when he discovered that consumer’s preferences vary and that there is a possibility to create 5+ best products possible to meet each of these unique preferences. Hence the creation of tomato sauce aisles that now look like below.

While this realization is a victory for consumer taste buds, when forced with a plethora of choice, limited information processing capabilities lead to non-rational decision making in the grocery store. Sheena Iyengar calls this the “choice overload problem”. Iyengar performed a study at a local grocer where she offered samples of six jams in one test and samples of 24 jams in another. She found that consumers were six times more likely to purchase jams in the case where they encountered less choice. When faced with a decision to choose from a number of varieties that was above the channel capacity of seven, consumers chose not to choose. This leads to consumers ending up at home without the dishwashing detergent they needed for the next load, grabbing the most recognizable item on the shelf that doesn’t meet their needs or preferences (a win for companies with high advertising budgets), or ending up with a premium priced product that does not maximize value.

Most consumers do not enter the grocery store as a leisure activity. I’ve lost count of the amount of times I’ve heard my mom say, “Let’s make this a quick trip – get in and get out.” Cognitive speed is required for the rush down the aisles to get home in time to make dinner at a reasonable hour. Usually this is not a problem considering consumers have a mental model of their grocery store: they know where the products are that they need, they have their preferred brand, and they have their “go-to” product. The panic of having to choose arises when a recipe calls for a new product, the “go-to” product is out of stock, or, worst of all, the packaging has been changed on the product so that it is no longer a part of the simplified mental model of the grocery store.  

Consumer behavior will not change, even when presented with introspection on their shopping habits. The role of marketers is to dominate their category and use insights on consumer behavior to lead consumers to purchase their products. So it comes down to the retailers to balance the variety of consumer taste with their inability to process a plethora of choices. An example of a retailer that does this well is Trader Joe’s with their staff selections of products, product descriptions on aisle labels, and highlights of new products, as seen below.

Resources:

Gladwell, M. (2004). Malcolm Gladwell: Choice, happiness, and spaghetti sauce

[Video file]. Retrieved from http://www.ted.com/talks/malcolm_gladwell_on_spaghetti_sauce

Iyengar, S. (2011). Sheena Iyengar: How to make choosing easier

[Video file]. Retrieved from http://www.ted.com/talks/sheena_iyengar_choosing_what_to_choose