Consumer Behaviour (CNBG20-4) Prof.

Prantosh Banerjee

The Psychology of Buying

The Consumer Psychology Perspective
According to the review of the Consumer psychology literature by Simonson et al, the consumer
psychology differentiates into majorly two of the many subgroups:

1. Information Processing Segment

2. Behavioral Decision Theory (BDT) Subgroup

Both being based in psychology, hold different emphasis to understand and explain how buyers make
choices. The differences are illustrated in the following table:

Information Processing Segment Behavioral Decision Theory (BDT)

1. Focus on Cognition and Affect
2. Focus on Stages of Communication
(Hierarchy of Effects) and Attitude
Formation
3. Memory Based Tasks
4. Employs cognitive response and Recall
measures
1. Focus on Choice Models, Economic
Psychology and Search Strategies
2. Focus on Decision Making Model,
especially determinants of choice
3. Stimulus based Tasks
4. Focus on Information acquisition,
verbal protocols and Response Time

The Role of Dual Processing

Buyers generally have to choose from a variety of brands. To make it easier for themselves, the
buyers follow a Simplification strategy:

Non-Compensatory
Decision Rules

Form Consideration
or Evoked Set

Apply Heuristics by
"Fast & Frugal" Rules

Employ Cutoff or
Screening Rules

Compensatory Rules

Harsh Srivastav (G20017) Rashika Saxena (G20032) Satyam Prabhakar (G20038)

Priyanka Biswas (G20077)
Consumer Behaviour (CNBG20-4) Prof. Prantosh Banerjee

Non-Compensatory Decision Rules

Non-Compensatory Decision Rules are the first to be employed by the buyers to quickly sift through
the huge number of choices that gets available to them. These are the criteria on which they consider
very important to their final choice of the product that they are intending to buy. For instance, when a
consumer goes out buying a house, considering that the number of rooms in the house is a non-
negotiable criterion for him/her, he/she can quickly filter the choices available with the exact
specifications that is required.

Compensatory Decision Rules

Compensatory Decision Rules are the criteria that the consumer is willing to do tradeoff. A tradeoff is
where a level of one feature or attribute is given up getting more of another feature or attribute. For
instance, in the case of a consumer looking to purchase a house, the budget can be stretched for
acquiring a house with a larger floor area.

Factors Influencing Decision Rule Usage

A few factors that influence Decision Rule usage of a consumer is:

i. Situational Factors such as Time pressure, search complexity and cost, switching cost, etc.
ii. Internal Buyer Characteristics like Product or Category Experience, cognitive style, and risk
tolerance.
iii. Marketing Factors like Degree of Product Differentiation, Breadth and Depth of models
available.
iv. Survey Instrument

It is hypothesized that generally, the more elements a buyer needs to consider and the more complex
the elements are, more like is the consumer going to simplify the decision making by using non-
compensatory decision rules.

Based on these, the research questions need to be asked such that the results obtained will generate
better understanding of the consumer buying behavior. For the non-compensatory decision rules,
common question formats such as ranking, constant sum, magnitude estimation, Q sort and “build
your own” guides the measurement. For the compensatory decision rules, conjoint analysis and
discrete choice modeling is used.

Conclusion
By investigating the use of non-compensatory and compensatory decision strategies implemented by
the buyers, the marketers can tailor their products marketing program to individuals or groups of
individuals based on the understanding of the buyer’s perceptions, preferences, and behavior.

Harsh Srivastav (G20017) Rashika Saxena (G20032) Satyam Prabhakar (G20038)

Priyanka Biswas (G20077)