Shift Happens

Observed in many cases is the paradox that more choices may lead to a poorer decision or a failure to make a decision at all. It is sometimes theorized to be caused by analysis paralysis, real or perceived, or perhaps from rational ignorance. A number of researchers including Sheena S. Iyengar and Mark R. Lepper have published studies on this phenomenon. The Paradox of Choice - Why More Is Less is a 2004 book by Barry Schwartz^[1]. In the book, Schwartz argues the controversial thesis that eliminating consumer choices can greatly reduce anxiety for shoppers.

Schwartz assembles his argument from a variety of fields of modern psychology that study how happiness is affected by success or failure of goal achievement.

Why we choose

Schwartz compares the various choices that Americans face in their daily lives. He compares the selection of choices at a supermarket to the variety of classes at an Ivy League College.

There are now several books and magazines devoted to what is called the "voluntary simplicity" movement. Its core idea is that we have too many choices, too many decisions, too little time to do what is really important. [...] Taking care of our own "wants" and focusing on what we "want" to do does not strike me as a solution to the problem of too much choice.

Schwartz maintains that it is precisely so that we can focus on our own wants that all of these choices emerged in the first place.

How we choose

Schwartz describes that a consumer's strategy for most good decisions will involve these steps:

• Figure out your goal or goals. The process of goal-setting and decision making begins with the question: "What do I want?" When faced with the choice to pick a restaurant, a CD, or a movie, one makes their choice based upon how one would expect the experience to make them feel, expected utility. Once they have experienced that particular restaurant, CD or movie, their choice will be based upon a remembered utility. To say that you know what you want, therefore, means that these utilities align. Nobel Prize winning psychologist Daniel Kahneman and his colleagues have shown that what we remember about the pleasurable quality of our past experiences is almost entirely determined by two things: how the experiences felt when they were at their peak (best or worst), and how they felt when they ended.
• Evaluate the importance of each goal. Daniel Kahneman and Amos Tversky have researched how people make decisions and found a variety of rules of thumb that often lead us astray. Most people give substantial weight to anecdotal evidence, perhaps so much so that it cancels out expert evidence. The researchers called it the availability heuristic describing how we assume that the more available some piece of information is to memory, the more frequently we must have encountered it in the past. Salience will influence the weight we give any particular piece of information..
• Array the options. Kahneman and Tversky found that personal "psychological accounts" will produce the effect of framing the choice and determining what options are considered as subjects to factor. For example, an evening at a concert could be just one entry in a much larger account, of say a "meeting a potential mate" account. Or it could be part of a more general account such as "ways to spend a Friday night". Just how much an evening at a concert is worth will depend on which account it is a part of.
• Evaluate how likely each of the options is to meet your goals. People often talk about how "creative accountants can make a corporate balance sheet look as good or bad as they want it to look." In many ways Schwartz views most people as creative accountants when it comes to keeping their own psychological balance sheet.
• Pick the winning option. Schwartz argues that options are already attached to choices being considered. When the options are not already attached, they are not part of the endowment and choosing them is perceived as a gain. Economist Richard Thaler provides a helpful term sunk costs.
• Modify goals. Schwartz points out that later one uses the consequences of their choice to modify their goals, the importance assigned to them, and the way future possibilities are evaluated.

Schwartz relates the ideas of psychologist Herbert Simon from the 1950s to the psychological stress which faces most consumers today. He notes some important distinctions between, what Simon termed, maximizers and satisficers. A maximizer is like a perfectionist, someone who needs to be assured that their every purchase or decision was the best that could be made. The way a maximizer knows for certain is to consider all the alternatives they can imagine. This creates a psychologically daunting task, which can become even more daunting as the number of options increases. The alternative to maximizing is to be a satisficer. A satisficer has criteria and standards, but a satisficer is not worried about the possibility that there might be something better. Ultimately, Schwartz agrees with Simon's conclusion, that satisficing is, in fact, the maximizing strategy.

Why we suffer

• Choice and Happiness. Schwartz discusses the significance of common research methods that utilize a Happiness Scale. He sides with the opinion of psychologists David Myers and Robert Lane. who independently conclude that the current abundance of choice often leads to depression and feelings of loneliness. Schwartz draws particular attention to Lane's assertion that Americans are paying for increased affluence and freedom with a substantial decrease in the quality and quantity of community. What was once given by family, neighborhood and workplace now must be achieved and actively cultivated on an individual basis. The social fabric is no longer a birthright but has become a series of deliberated and demanding choices.
• Freedom or Commitment. Schwartz connects this issue to economist Albert Hirschman's research into how populations respond to unhappiness: they can exit the situation, or they can protest and voice their concerns. While free-market governments give citizens the right to express their displeasure by exit, as in switching brands, Schwarts maintains that social relations are different. Instead, we usually give voice to displeasure, hoping to project influence on the situation.
• Second-Order Decisions. Law professor Cass Sunstein uses the term "second-order decisions" for decisions that follow a rule. Having the discipline to live "by the rules" eliminates countless troublesome choices in one's daily life. Schwartz shows that these second-order decisions can be divided into general categories of effectiveness for different situations: presumptions, standards, and cultural codes. Each of these methods are useful ways people use to parse the vast array of choices they confront.
• Missed Opportunities. Schwartz finds that when people are faced with having to choose one option out of many desirable choices, they will begin to consider hypothetical trade-offs. Their options are evaluated in terms of missed opportunities instead of the opportunity's potential. Schwartz maintains that one of the downsides of making trade-offs is it alters how we feel about the decisions we face; afterwards, it affects the level of satisfaction we experience from our decision. While psychologists have known for years about the harmful effects of negative emotion on decision making, Schwartz points to recent evidence showing how positive emotion has the opposite effect: in general, subjects are inclined to consider more possibilities when they are feeling happy.

Schwartz integrates various psychological models for happiness showing how the problem of choice can be addressed by different strategies. What is important to note is that each of these strategies comes with its own bundle of psychological complication.
^{source: Wikipedia}

Consumer behavior is the study of how people buy, what they buy, when they buy and why they buy. It blends elements from psychology, sociology, sociopsychology, anthropology and economics. It attempts to understand the buyer decision making process, both individually and in groups. It studies characteristics of individual consumers such as demographics, psychographics, and behavioural variables in an attempt to understand people's wants. It also tries to assess influences on the consumer from groups such as family, friends, reference groups, and society in general.

Basic model of consumer decision or EKB model (Engel, Kollat & Blackwell, 1969), source: Belch & Belch, 2007
Stage	Brief description
Problem recognition	Perception of need and motivation to solve a problem	Motivation
Information search	Search for information required to make a purchase decision	Perception
Information evaluation	Consumer compares various brands and products	Attitude formation
Decision	Consumer decides which brand to purchase	Integration
Post-purchase evaluation	Consumer evaluates their purchase decision	Learning

Problem recognition

Problem recognition results when there is a difference between one's desired state and one's actual state. Consumers are motivated to address this discrepancy and therefore they commence the buying process.

Sources of problem recognition include:

• An item is out of stock
• Dissatisfaction with a current product or service
• Consumer needs and wants
• Related products/purchases
• Marketer-induced
• New products

The relevant internal psychological process that is associated with problem recognition is motivation. A motive is a factor that compels action. Belch and Belch (2007) provide an explanation of motivation based on Maslow's hierarchy of needs and Freud's psychoanalytic theory.

Information search

Once the consumer has recognised a problem, they search for information on products and services that can solve that problem. Belch and Belch (2007) explain that consumers undertake both an internal (memory) and an external search.

Sources of problem information include:

• Personal sources
• Commercial sources
• Public sources
• Personal experience

The relevant internal psychological process that is associated with information search is perception. Perception is defined as 'the process by which an individual receives, selects, organises, and interprets information to create a meaningful picture of the world'

The selective perception process, source: Belch & Belch, 2007
Stage	Brief description
Selective exposure	Consumers select which promotional messages they will expose themselves to
Selective attention	Consumers select which promotional messages they will pay attention to
Selective comprehension	Consumers interpret messages in line with their beliefs, attitudes, motives and experiences
Selective retention	Consumers remember messages that are more meaningful or important to them

You should consider the implications of this process on the development of an effective promotional strategy. First, which sources of information are more effective for the brand and second, what type of message and media strategy will increase the likelihood that consumers are exposed to our message, that they will pay attention to the message, that they will understand the message, and remember our message.

At this time the consumer compares the brands and products that are in their evoked set. How can the marketing organization increase the likelihood that their brand is part of the consumer's evoked (consideration) set? Consumers evaluate alternatives in terms of the functional and psychological benefits that they offer. The marketing organization needs to understand what benefits consumers are seeking and therefore which attributes are most important in terms of making a decision.

The relevant internal psychological process that is associated with the alternative evaluation stage is attitude formation. Belch and Belch (2007, p.117) note that attitudes are 'learned predispositions' towards an object. Attitudes comprise both cognitive and affective elements - that is both what you think and how you feel about something. The multi-attribute attitude model explains how consumers evaluate alternatives on a range of attributes. Belch and Belch (2007) identify a number of strategies that can be used to influence the process (attitude change strategies). Finally, there are a range of ways that consumers apply criteria to make decisions. Belch and Belch (2007) explain how information is integrated and how decision rules are made including the use of heuristics. The marketing organisation should know how consumers evaluate alternatives on salient or important attributes and make their buying.

Purchase decision

Once the alternatives have been evaluated, the consumer is ready to make a purchase decision. Sometimes purchase intention does not result in an actual purchase. The marketing organization must facilitate the consumer to act on their purchase intention. The provision of credit or payment terms may encourage purchase, or a sales promotion such as the opportunity to receive a premium or enter a competition may provide an incentive to buy now. The relevant internal psychological process that is associated with purchase decision is integration.

Post-purchase evaluation

The EKB model was further developed by Rice (1993) which suggested their should be a feedback loop, Foxall (2005) further suggests the importants of the post purchase evaulation and that the post-purchase evaluation is key due to its influences on future purchase patterns.

The goal of traditional marketing is getting the customer to the product, using the 'hard sell'. It differs with marketing we see today by the fact that it focuses on the product, instead of the consumer. Todays marketing is all about you. The consumer. What are your needs, wants and wishes, what problems do you have that can be solved with product X? Now, products are problemsolvers. They will make YOUR life easier.

On the left, a Volkswagen ad from the 1960s, where it's all about the product. On the right, a modern day ad for disabled people. Both of the ads have the same goal but use different means.

Todays advertising is increasingly more about working together with consumers and agencies to create a brand that more people will love. Consumers can recognize when a products addresses a specific problem in their life or have ideas about how to improve products so it can better fit their needs. This information is vital to agencies for marketing and branding strategies; finding better ways to speak to consumers, and to companies to improve their products that will appeal to more people. Also, when agencies collaborate with the company and its consumers they can determin what the unique value is that a product can bring to peoples' lives and with that information create better products and elevate the brain position ^[2] of the brand. It's not just a company making products anymore, it's an idea. You're not buying products, you're improving your life, one product at the time.

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