The Myth of the Rational Consumer

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There is a basic misunderstanding about the forces that shape shopping behavior. Consumers believe that they act rationally to maximize their personal best interests when making purchase decisions. And marketers assume that consumer shopping decisions are based on a rational evaluation of the features and attributes of the products they sell—aided, of course, by communications and other brand promotion activity.

But consumer rationality is more myth than fact. We know this from an in-depth analysis of consumers’ self-reported behavior and a review of the psychological factors that affect their purchasing process.

Consumers’ Self-Perception of Rationality

When we use traditional market research methods, such as focus groups and in-depth interviews, and ask consumers to tell us whether their purchase behavior is influenced by factors such as brand names, advertising, social media, and promotional purchase incentives; they describe themselves as totally rational, objective shoppers and claim that their decisions are not affected by these influences.

Consumers are aware that they are targets of unrelenting marketing activity. However, they overwhelmingly believe that they are strong, independent thinkers who are not seduced by the power of marketers.

Consumers also tell us how their decision-making comes about. When we ask how they make purchase decisions, consumers talk about their mental processes; describing how they investigate and weigh product features, consider such factors as how the benefits of one brand stack up against the competition and which is the best value for their money.

Systematic Bias

The problem with the consumers’ self-perception of rationality is that their view is skewed by systematic bias.¹

Consumer bias is revealed when they overestimate their immunity from marketing influences. By attributing their purchase decisions to rational thinking rather than the influence of brands and advertising, consumers affirm their autonomy and derive satisfaction from this perceived control over their lives.

A second source of consumer bias is found in their descriptions of rational mental processes. The fact is that the human mind does not have access to information about the processes involved in its decision making. Awareness of the mental machinations that produce specific behaviors is an illusion that makes us feel like we are in control. To maintain internal levels of confidence, we create narratives of mental processes to explain unconscious causes of behavior to ourselves and others.

Marketers also have a systematic bias that affects the relationships of their brands with consumers. The marketing process views the consumer through the lens of the product. This product-centric view is bias in itself, as it constrains the exploration of the deep-seated psychology of motivations and preferences. Marketers’ bias can be overcome by viewing and understanding their products through the lens of the consumers’ minds.

Psychological Insights into Consumer Decision Making

The Myth of the Rational Consumer comes into clearer view when we apply psychological research methods to explore shopping behavior. Using this approach, we go beyond conscious self-reports of decision-making to discover the nonconscious factors that shape consumer behavior.

Following are three examples from original research we have conducted into the psychological drivers of consumer behavior.

1. Technology products and services

In the pre-digital age, technology was perceived objectively and rationally. Consumers asked themselves, "What benefits and pleasures will I get from this product or service?"

Psychological research reveals that the Internet and smartphone have dramatically changed perceptions of technology from practical benefits to emotional end-benefits that touch motivations and needs. The consumers’ connections to technology have shifted from an objective to a subjective relationship—formed by the unconscious perception of "how this technology expresses and enhances who I am."

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2. Consumer package goods

In traditional research, consumers describe preferences for products they buy in supermarkets and other mass retailers in rational terms, such as attributes like taste, usage, or consumption characteristics.

Our psychological studies reveal that the purchase decisions about package goods products are largely driven by consumer perceptions that the brand is an extension of the self. This connection is based on the closeness of the match between the “personality” of the brand and the consumer’s own personality. Further, consumers’ beliefs about a brand’s personality are based primarily on their interpretation of its “story”—the narrative expressed in communication, packaging, and other marketing elements. The narrative communicates what the brand means to them—the emotional connection. It is this connection that makes consumers loyal to brands.

3. Luxury brands

Consumers describe their decision-making process when purchasing a luxury product or service in terms of their judgments about the importance of the brand name and how unique and exclusive it is. They cite these rational factors as the elements of a luxury brand that satisfy the aspirational motives of their purchase.

Research into deeper psychological reasons for their behavior reveals unconscious perceptions about a brand’s authenticity and timelessness—what consumers describe as its “truth.” These perceptions evoke emotions—the sense of trust and security that is the essence of luxury for consumers.

Consumer Decision-Making: A 3-Step Process

Using psychological studies like those above, we found similar results in healthcare, financial services, beauty and skincare, non-profit organizations and causes, and many other categories.

Our work reveals that consumers go through three steps in the purchase decision process. The process begins with overall perceptions about a category. Next, the motivations and needs of consumers drive initial perceptions of individual product and service options within the category. Finally, it is the perceived emotional end-benefits of owning and using specific products or services that moves consumers to a purchase decision and action.

If consumers were rational, the process would stop at the point of analyzing how well the product features and attributes satisfy needs and motivations. But that is not the case. It is the consumers’ perceptions of emotional payoffs that cause purchase behavior.

¹ For information about systematic bias as it influences economic and voter behavior see Bryan Caplan's book, The Myth of the Rational Voter

© 2016 Peter Noel Murray, Ph.D.