NEW PATTERNS IN CONSUMER DECISION MAKING
LAMENTING INFORMATION OVERLOAD is nothing new. Historian Ann Blair found scholars complaining as early as 1545 about a “confusing and harmful abundance of books.”1 These days you hear so much about information overload and its paralyzing effects on decision making that sometimes you wonder how consumers make decisions at all. While we agree that people face unprecedented amounts of information (and that indeed some are overwhelmed by it), most consumers can handle the information just fine. Consumers are actually very good at identifying that slice of information that is most relevant to them. They can use information selectively and efficiently and benefit from it without being overwhelmed or overloaded. The scale of information abundance that we currently experience is a very new phenomenon in the history of the human race, and it will probably take a while before we fully comprehend its implications. The conclusion that it paralyzes decision making seems a bit hurried, and a bit detached from reality if you watch people shopping before Christmas.
In fact, we see new patterns in decision making that emerge with the abundance of high-quality information. We already covered the primary pattern—a fundamental shift from reliance on relative evaluations to reliance on absolute values. In a world with improved access to high-quality information, more and more decisions will be based on absolute values, resulting in better choices overall.
In this chapter we’ll explore three additional interesting patterns: First, some consumers compulsively acquire information, which can turn the traditional decision making process on its head. Second, consumers are often compelled to use the information they acquired, which accelerates the adoption (or rejection) of new products. Third, with the abundance of “rational,” spec-driven information, decisions about products and services are made more from the head and less from the heart.
Clearly, there’s a wide range in how people react to the new information environment, so not all consumers experience these trends at the same intensity. There are those who can’t or won’t use new sources of information (we’ll discuss them in Chapter 12). This chapter is about the growing segments of the population who do.
Let’s start with the much-heralded concept of “choice overload”—the belief that giving people more options can cause them to make no choices at all. As we mentioned in Chapter 1, many observers have emphasized that people are overwhelmed by too much information on the Internet. This may be true for some people, but those who take advantage of new tools can actually narrow down and sort their choice set rather quickly. Think about your own experience on Amazon.com (and recall that 30 percent of U.S. consumers start their online purchase research on Amazon). Search for a camcorder on Amazon and you’ll see a couple of dozen options. You can then quickly narrow them down to the most popular or the best-rated models. For each one you can tell the average rating and number of reviewers in about a second. Or consider a website such as Sephora.com, with its enormous selection of beauty products. A customer who’s looking for makeup foundation can quickly zero in on what she wants through a set of menus or through keyword search. Sorting through reviews is becoming easier as well. A customer doesn’t have to read through 659 pages of reviews of Bare Minerals SPF 15 Matte Foundation. Instead, she can focus on only those reviews written by consumers with dark skin and brown eyes, for example, by clicking on these two filters. New searching and sorting technologies are likely to further develop and alleviate the problem, which probably hasn’t been that severe to begin with. As you recall, a review article that combined the results of fifty experiments dealing with choice overload showed the effect to be quite fragile, concluding that the overall effect was almost zero.2 Even if some consumers are initially overwhelmed by too many options, in many categories they rely on expert opinions and on recommendations from other users. This may be another case where there’s a gap between what can be shown in the lab and what actually happens in real life. Consumers may be overwhelmed when facing twenty laptops, but if they are immediately drawn to the most popular models and to those with the highest ratings, the problem is largely resolved.
Let’s look now at the three trends that are emerging as a result of our new information diet: “couch tracking,” “faster verdict,” and “more from the head.”
COUCH TRACKING
“This is the #1 netbook on my radar now”
“I’ve been watching these tablets for a year”
“I have been following the HTC Holiday rumors for months”
These comments from Engadget and other forums represent the first decision pattern: Some consumers routinely acquire information that can completely transform the decision making process for these people. Traditional models of decision making have not paid much attention to this “on my radar” behavior. Aside from habitual, impulse, and “low involvement” purchases, the purchase process in traditional models is typically assumed to begin when the consumer recognizes a problem. Next, the consumer engages in information search and evaluates options, which leads to preferences and a purchase decision (or purchase delay). But today, when high-quality information is so readily and cheaply accessible, some people don’t see the need to postpone information acquisition until a specific purchase intention is formed. Instead, like sports buffs keeping track of the game from their couches, millions of people keep track of products on an ongoing basis.
Granted, this is not the way people buy vacuum cleaners or laundry detergent. But this continuing information acquisition process—which we nickname couch tracking—represents an important shift for certain segments and certain categories.
It’s not an insignificant phenomenon, and we expect it to become even more prevalent. Gadget websites get millions of visitors a month (we’re talking about sites such as CNET, Gizmodo, Engadget, macrumors, The Verge, gadgetwise, PhoneDog). Add to this the millions of people who follow products on mainstream media or on retail websites such as Amazon. Many also follow these information sources through Facebook or Twitter. Some couch tracking is directed at particular brands. Companies like to think of these folks as “fans” or “loyal customers.” They aren’t necessarily. These brands may simply be on these consumers’ radar. Pinterest is another relevant tool in that it makes it easy to maintain wish lists. Then there are online communities that focus on an area of interest, a product or a brand of interest. For example, members of nikonians.com are talking about Nikon cameras. They keep track of the scene regardless of any specific purchase intention. If you’re a sports car enthusiast, there’s sportscarforums.com. There are forums about bags, video games, motorcycles, boats, pets, snowmobiles . . . you name it. The main point is this: If you’re reading any of these sources on an ongoing or even occasional basis, it means that more often than not, you’re not in the market for the products you’re reading about. You just want to know what’s out there. You’re couch tracking.
What does the rise of couch tracking mean to marketers? It means that preferences are often formed well in advance of any specific plan or intention to purchase. As a result, once an intention to buy is formed, the decision is pretty much already made. Accordingly, marketers should pay more attention to couch trackers rather than just focus on declared buyers. The idea of “being in the market” is changing. The sequential, phased decision process is becoming less common for certain segments. Instead, when these consumers get close to buying, in many cases they have already decided.
ACTIVE SEARCH AND FASTER VERDICTS
We react differently to information that we seek as opposed to information that we encountered incidentally. What’s the difference? The very fact that we initiate the information acquisition—that we actively seek it—creates an interesting side effect. When we deliberately seek information, we are more likely to use it. Scholars like Amos Tversky, Eldar Shafir, and Anthony Bastardi have shown in a series of studies that when people engage in deliberate pursuit of information (whether this information is instrumental to their decision or not), they are inclined to use it.3 The explanation is pretty straightforward: In essence, people infer from their own behavior that, if they looked or waited for that information, they must value it and should now take advantage of it.
While pre-purchase search is certainly not new, the amount, sources, cost, and quality of searches have significantly changed. The same factors that lead to the couch tracking phenomenon also mean that consumers nowadays acquire more information than they used to.4 When much of our information diet consisted of incidental information (things that we didn’t ask for, like TV commercials), we didn’t feel as compelled to use it. Yet these days, when a higher percentage of decisions is a result of an active premeditated search, more decisions lead to action. And by “action” we don’t necessarily mean buying. A decision not to buy is also a verdict. This may be one of the factors that contribute to the acceleration of adoption (or rejection) of new products. People hear about a product, they search for it, and since they deliberately searched, they feel that they need to act one way or another. The fate of products is determined faster as a result.
The decision making process is often compressed for another reason. If in the past some unplanned purchases were dropped because consumers felt they “need to do more research,” today more people feel comfortable going from discovery to purchase, sometimes at a surprising speed. Decisions now sometimes happen in one sitting. Browsing through an online store, you discover a new camera, you see that it’s number one under the “Camera & Photo” category, you get all the quality and user popularity information you need, and decide to purchase. The answer’s out there, so there is less of a reason to wait. Marketers often talk about the decision process as a funnel that goes from awareness to comprehension, to preference formation and then to purchase. They also like to measure the number of consumers who are at each stage at a certain point in time, yet these measurements don’t mean as much when people can skip steps so easily.
MORE FROM THE HEAD, LESS FROM THE HEART
Another shift in our information diet that largely goes unnoticed has to do with the emotional content of the information we consume. To understand what we mean, consider two scenarios: Under scenario A you walk into an art gallery unprepared and see some beautiful paintings. Simple—it’s all about your raw impression of the paintings. Under scenario B, you read some background information about the exhibit before you go to that gallery: You read a detailed analysis of the paintings, resale value of the work displayed, the artist’s bio, and how she fits in the current art world. Under scenario A your emotions don’t face much competition from your cerebral side, so they are likely to play a bigger role in your decision. In contrast, under scenario B, everything you’ve read is competing with that most primal emotional reaction. Your emotions are still likely to play a role, but probably a reduced one.
Hanging out on newsgroups or reading consumers’ contributions on review sites, you’re much more likely to come across “rational” than “emotional” information. By “rational” we refer to the instrumental, essential value of the product, to things such as reliability, features and other specs, uses, resale values, and popularity. By “emotional” we refer to feelings like warmth or nostalgia. Now, it’s true that people do use words like “love” or “hate” in reviews, but we need to make a distinction between mentioning a word and actually evoking that emotion. Advertisers usually know how to evoke emotions (especially on TV). On the other hand, reviewers, even when they try, are usually less skillful at that (probably with the exception of anger and frustration, which are evoked more easily). But most content generated by consumers tends to be fact-based anyway. In many cases emotional considerations are seen as private, idiosyncratic aspects that are not suitable for sharing with others.
These days there’s less sugar in our information diet, and decisions influenced by reviews and the like tend to be made from the head and less from the heart. There’s also less sugarcoating. People tend to be brutally honest on the Internet, which creates a “say it as it is” culture.5 The language that consumers used to rely on in making decisions has changed dramatically. Thirty years ago, when you shopped for a camera, you relied on ads that talked about preserving the precious memories of your family or told you a camera will give you “the power to be your best.” The language of reviews tends to be more specific, more matter-of-fact and focused on quality and the use of the camera. Consumers are less exposed to advertising puffery when most of their information comes from experts and fellow consumers. Emotional appeal can still be powerful, and we’re not saying that “warm and fuzzy” is dead. It’s just less effective when it faces meaningful competition from more “rational” sources. Think of yourself buying a car in the 1990s. Besides Car and Driver and Consumer Reports, the information environment was dominated by the marketer who injected as much emotional appeal as they wanted. Emotions still play an important role in buying a car, but if you immerse yourself in dozens of reviews before your next purchase, the relative role of these emotions is reduced.
While emotional response is often very important (for example, when considering which car to buy), for products and services that have specs (and we are not talking about spouses) quality is usually regarded by consumers as the most important consideration that should guide choices. Product preferences are usually expected to be based on objective quality rather than subjective feelings. It’s no wonder, then, that with the explosion of information about quality, consumers gravitate toward it.
A PEEK AT PLANET ABSOLUTE
Peter Rojas is one of those who have created environments that facilitate the trends we just discussed. He’s someone who really takes full advantage of the information out there. So much so that when we spoke to Rojas, it suddenly dawned on us that we may be talking to someone from our utopian Planet Absolute. The setting of the interview went along with that intergalactic feeling: We, the earthlings, were sitting at Emanuel’s old dining table, and to support the iPad that we used for Skyping, we piled some books into a structure that we were hoping wouldn’t collapse in the middle of the interview. Rojas was sitting in New York City wearing ultramodern headphones that gave him a somewhat futuristic look. It’s fair to say that we’re well-informed consumers when it comes to technology, but on occasion, we had a hard time keeping up with the stuff he was throwing at us. Rojas is exposed to insane amounts of information about technology, and to say that he’s up-to-date is an understatement because he usually knows things through leaks well before they’re announced.
Rojas’s personal journey represents some of the changes that have taken place in consumer information. About ten years before our conversation with him, he was freelancing for Wired magazine. He was an experienced technology journalist who had written for the New York Times, Fortune, and the Guardian, and had been editor of Red Herring, a magazine that focused on the business of technology. In retrospect we know that this was the twilight of a top-down media world where companies could pretty much control when and where they released information to the public through the media. In 2002 Rojas started moving into blogging, which was a relatively new thing. He wrote a blog called Gizmodo, which was dedicated to gadgets. At the time, the thought that anyone outside the tech industry would be interested in a spy photo of a new phone wasn’t obvious, but Rojas sensed that interest in technology and gadgets had gone way beyond just Silicon Valley. In 2004, he started a similar blog, Engadget, a site that took advantage of a wide network of readers in the industry who would feed it with tips, secret product specifications, and photos of prototypes.
Rojas is the first to point out that not everyone reads the news blogs he started. So who does? “I tend to think of them as people for whom following technology is just like other people follow sports,” he told us. “They have their favorite teams, and they like the horse race. It’s not just about what they’re going to buy, it’s also about the dynamics, who’s up, who’s down, what’s coming down the pipe.” In short, they are couch tracking.
In 2009 Rojas and Ryan Block started a site called gdgt.com (pronounced “gadget-dot-com”). As opposed to Engadget and Gizmodo, which were essentially news sites driven by a team of editors, gdgt.com is driven by the users. It’s kind of a Wikipedia for gadgets crossed with a social network. If you follow Rojas, for example, you can click on his profile and see that he has 76 gadgets. Click on one of them—the Samsung Galaxy S III, for example—and you can read 115 reviews of this model, 17 discussion threads, or 33 questions that were answered by owners.
Spending some time on the site, it’s easy to see the trends we discussed here. Choice overload doesn’t seem to be a problem; things are easy to find and sort. For example, under the category of laptops, you can search for only those in a particular price range and processing power. Each gadget you find is displayed with a score that is based on reviews from professional tech sites as well as users. For those who want just the bottom line, gdgt displays up to three “Must Haves” per category. Couch trackers can tag a product as one that’s on their radar by simply marking it with the “I want it” tag (the other tags are “I have it” or “I had it”). Heavy users of the site are into compulsive collection of information and are clearly compelled to have the latest and greatest. We’re sure that gdgt members have emotions and that those play some role in their decisions, but you’d be hard-pressed to find emotions expressed in the content they create.6
As we pointed out, there’s a wide range in how people react to the new information environment. Thinking about it as a continuum, the gdgt.com crowd represents the super-informed on one end. On the very other end, there are those who do not take advantage of the available information or are totally overwhelmed by it. The rest of us are somewhere in the middle, but as tools develop and handling information becomes even easier, it’s just a matter of time before at least some of the behaviors we described are adopted by wider and wider circles.
In this chapter we examined three emerging trends in consumer decision making. First, we talked about “couch tracking,” where consumers acquire information on an ongoing basis from the comfort of their couch. This can turn traditional models of decision making upside down: When these consumers gather information, they are not in the market, and when they are in the market, they have already decided. Second, we argued that consumers reach their verdict faster. When people deliberately seek information, they are more likely to use it, and since more decisions are a result of an active, premeditated search, consumers reach a verdict faster (adoption or rejection). Third, we said that decisions will be made more from the head and less from the heart. Although emotions will always play an important role in people’s decisions, consumers today are more likely to come across “rational” information created by fellow consumers (who tend to focus in their content on things like reliability, features, price, popularity, and specs). Overall, the current abundance of information is a new phenomenon and it will take some time before we fully understand its implications. We certainly agree that people can be overwhelmed by too many disorganized options under certain conditions, but research suggests that the choice overload problem is not as serious as it has been portrayed. This is true especially as search and sorting tools steadily improve.