Customer behavior and marketing decisions

Decision-making processes and the role of

emotions in decision-making
Jeanne Srensen Bentzen
Assistant Professor, PhD
Department of Business and Management
jeas@business.aau.dk

Session topics
Decision-making models
Emotions in decision-making
Hedonic and utilitarian value

Simple model of decision-making

Input (external
influence

Marketing inputs and sociocultural inputs

Need/problem recognition

Process
(consumer
decision-making

Information search
Evaluation of alternatives

Output (postdecision
behavior)

Purchase/product choice
Post-purchase evaluation
Shiffman, Kanuk and Hansen (2008) p. 75

Assumption:
Cunsumers gather as much data as they need to make an informed decision until the cost of the
search is larger than the reward
Critique:
Consumer behavior is not always rational and does not always involve advanced planning

Choice strategies - Constructive processes

1.

Well-thought out rational approach

Investment of required cognitive power

2.

Shortcuts and learned responses = automatic choice

reduce/minimize time and effort

Depends on level of involvement

Types of behavior
1.

Routine response behavior

2.

Limited problem solving

3.

Extensive problem solving

Increase in
cognitive effort

Ad 1: Little or no consicious effort, automatic process,

repitative, perhaps even unconscious
Ad 2: Limited information search, simple decision-rules
Ad 3: Most similar to the decision-making model, collect
info (external + internal), evaluation of information

The consumer as problem solver

Need/Problem recognition

Difference between current state and desired or ideal state

Problem creation: 1) Need recognition (actual state)

2) Opportunity recognition (ideal state)

The consumer as problem solver

Information search
Types of search:
1) specific/purpose related information search
2) on-going search
Motivated by:
1) Need recognition
2) Browsing for fun or to stay updated
Sources:
Information: Internal vs. external
Knowledge (internal): Directed learning vs. Incidental learning
Assumption:
Consumer gather as much information as needed
Consumers continue search as long as it is rewarding
Most valuable units of information is collected first

The consumer as problem solver

Information search
Biases:
Mental accounting
Loss aversion
Prospect
How much information search?
Depends on age, education, gender, style/image, prior knowledge,
risk perception

The consumer as problem solver

Evaluation of alternatives
Identification of alternatives:
a)Known alternatives
b)Considered alternatives (evoked set)

To help choice process products are grouped into categories

Complex system different levels of

similarity

The consumer as problem solver

Purchase/Product choice
Evaluative cirteria
Mental short-cuts (heuristics) to simplify our choice
Product signals
Market beliefs
Country of origin
Loyalty or habit
Decision rules
Non-compensatory
Compensatory
Consumer neuroscience - Is there a buy botton in our brain?

The consumer as problem solver

Post-purchase evaluation

Performance match expectation

Performance exceed expectation
Performance is below expectation

neutral feeling
satisfaction
dissatisfaction/regret

Satisfaction will often lead to repurchase.

Dissatisfaction will lead to seach for more suitable alternatives

The standard constructed choice model

Content

Self/
Values

CHOICE
PROCESS

Active
Goals

Outcome
Regret/satisfaction
emotion
Source: Griffin, Liu and Kahn, 2005: 323

Inputs to the choice process

Content
Choice options (alternatives)
Information from memory

Self/value
Ongoing personal values of the individual

Active goals
Current motivational state

The individual and the environment (context) in interplay

determines values, preferences and current goals

The choice process and its outcome

The mind of the consumer
Affect = the way a consumer feels about an attitude
object
Cognition = the beliefs a consumer has about an attitude
object
Interplay between cognitive and affective processes
Outcome of the choice process
Hedonic value
Utilitarian value

The basic constructive choice model

and recent development

Source: Griffin, Liu and Kahn, 2005: 323

Example of emotion vs. cognition in choice

Choice between chocolate cake and fruit salad as snack
Affect dominates cognition when peoples cognitive
processes are constraint
Impulsivity (personality trait) and real vs. symbolic products
affect how big the impact is

Constraints in environment is likely to increase

impulsive behavior especially in affect laden
products

The role of emotions in decision-making

- input from cognitive neuroscience
Decision-making without the influence of emotions is not
possible. (Damasio, 2000,)
Sound and rational decision-making depends on prior
accurate emotion processing (Bachara and Damasio,
2005: 336)
Cognitive and affective processes cannot be seen as
separate systems

Damasio, A. (2000), The feeling of what happens, Vintage

Bachara and Damasio (2005), The somatic marker hypothesis: A neural theory of economic decision, Games and Economic Behavior, 52

Anticipated emotions as guides to choice

People often anticipate the emotions they might

experience as a result of the outcomes of their choices
(Mellers and McGraw, 2001: 210)

Anticipated emotions as guides to choice

Theory of anticipated pleasure
Pleasure and pain of future outcomes weighted by chance of
occurrence (compensatory decision rule)
Average anticipated pleasure of each option
Preference of one emotion over another

Errors
Systematic prediction errors
People tent to anticipate feeling worse about negative outcome than they
actually do

Overly risk seeking or overly risk averse

Emotions experienced during the choice process as noice
Focusing illusion
Focus on whatever is salient in the moment
Focus on transitions rather than final states (goal framing)

Purpose of emotions direct causation or

feedback?
Provides impulses to action
Stimulate approach/avoidance tendencies (Evolutionary
perspective - survival mechanism )
Influence the way we process information
Effects or guides the way we make decisions
Motivate, direct and regulate actions (goal directed behavior)
Tools of communication and behavior guides in interpersonal
relationships
Facilitates learning to support the prediction of future
outcomes

Summing up
Levels of cognitive effort and problem solving behavior varies in
consumer choice process
Extensive problem solving situations are surprisingly limited

The traditional perspective on decision-making is thus not

satisfactory in explaining consumer choices
Involvement level
Product category
Risk perception
Demographic characteristics
Prior knowledge/experience
The interplay between affect and cognition varies with the type of
problem solving process

Summing up
Automatic and relatively effortless processing without
awareness may be the most critical aspect to understand
decision-making
Emotions are both input and output
Outcome of choice process
Hedonic value = enjoyment and fun
Utilitarian value = successful accomplishment of goal
Regret/satisfaction = emotion
Outcome effects future decisions through experience and
memory