Choice: Assortment Size and No-choice Option

1. Choice: Assortment Size and No-choice Option

2. Choice in Laboraory • Two-key procedure • Concurrent schedules of reinforcement • Typically VI-VI • Each option associated with separate schedule • Distribution of time and behaviour • COD

3. Choice in Real World • Many simultaneous options • Combination of schedules • Unequal levels of reinforcement • Bias common

4. Bias • Spend more time on one alternative than predicted • Biological predispositions • Previous conditioning • Quality and amount • Advertising!

5. Herrnstein’s Basic Matching Law • B = behaviour • R = rate of reinforcement • A = amount • Q = quality

6. Self-Control • Conflict between short- and long-term choices • Choice between small, immediate reward or larger, delayed reward

7. Ainslie-Rachlin Theory • Value of reinforcer decreases as delay b/t choice & getting reinforcer increases • Choose reinforcer with higher value at the moment of choice • Ability to change mind; binding decisions

8. Assortment • Assortment benefits consumers • Common marketing assumption • From classic economic theories • Large assortment should offer better match between consumers’ preferences and product offering • Is large choice really better?

9. Large Assortment Positives • Better matching argument • Individual preferences and product characteristics • Option value argument • Keeps consumer options open • Flexibility when making purchasing decisions • Anticipation of future variety-seeking behaviour • Perceived freedom of choice

10. Reducing uncertainty of choice set • Do options adequately represent all contingencies available? • Delay in purchasing can occur if consumer uncertain about alternatives

11. Large Assortment Negatives • Increased demand on cognitive resources • May produce weaker preferences for product(s) • Increased effort to evaluate attractiveness of alternatives • Consumer confusion • As choices increase, confusion increases, and no choice may be made

12. A Common Assumption • Consumers possess readily available criteria for evaluating choice alternatives • Main task is to find alternative that best matches criteria

13. But... • Consumers regularly make choices when lacking sufficient expertise • May lack good decision criteria • Might have to construct criteria before making choice • Information gathering • Choice behaviour • Easier in smaller assortment

14. “Perfect” Condition • Consumer has decision criteria • Preformed preference for a particular alternative • If alternative is available, selection doesn’t require detailed evaluation • But...

15. Product Ideal Point • Combination of attributes and attribute values describing ideal choice alternative

16. Example • Consumer A: • Familiar with scotch products and has favourite brand, e.g., Oban (peaty, smoky) • Consumer B: • Familiar with key attributes describing scotch, and has ideal combination, but doesn’t know specific brand • Consumer C: • Familiar with key attributes but lacks favourite brand and ideal attribute combination

17. Consumers A, B, and C differ in availability of ideal point • A has readily defined ideal point and a specific option corresponding to that point • B also has ideal point, but no specific option corresponding to it

18. Decision Process • A’s decision process will be different from B’s and C’s • A has a memorized preference for a choice option • Match specific option to ideal point • “Affect referral” strategy • Simply retrieve memorized evaluation without actively processing attributes • B and C still have to construct option-specific preferences

19. Chernev (2003) • Focuses on scenarios in which consumers face decision problems for which affect referral does not provide a ready solution • Asking what the impact of assortment size is on choice

20. Experiment • Subjects asked to articulate their ideal attribute combination • Made choice from large (16) or small (4) assortment • Strength of preference (dependent variable) was operationalized as likelihood of switching to another option

21. Stimuli were various chocolate assortments • Chocolate type, cocoa content, flavour, nut content • 88 undergraduates • Dependent variable • Reward of 2 chocolates of same kind selected in choice task or 2 of the most popular chocolates from the Godiva collection • Would they stay with choice or switch? • Measures preference strength

22. Results 50% • Subjects perceive larger set to offer more variety • But, variety offered not perceived to be extreme in either direction • Switching • Ideal point and assortment size 38% 27% 25% switching behaviour 13% 9% small assortment large assortment Ideal point not available Ideal point available

23. Additional Experiments • Articulated/non-articulated ideal state conditions • Choices from more varied options • General patterns from exp. 1 hold

24. General Findings • Readily formed ideal attribute combinations provide subject with a benchmark for evaluating alternatives in choice set • For these subjects, large assortments less likely to generate weak preferences • Subjects lacking ideal point susceptible to cognitive overload with large assortments

25. Cognitive Dissonance • Consumer ranks two attributes as equally attractive • Difficult to trade off these attribute levels • Committed to both attributes • Cognitive dissonance associated with rejecting either more pronounced • Lowers consumer’s decision confidence • Increases probability of switching

26. Conclusions • Consumers without an ideal point • Complex simultaneous tasks of forming ideal attribute combination and searching for best match • For large assortment, having ideal point simplifies task • In small assortment, having strong ideal point may complicate task if no ideal match is available

27. Example • Mid 1990s Apple computer • Reduced number of Macintosh sub-brands • Hoped to increase sales by decreasing consumer confusion

28. Choice/No-choice • Desired vs. undesired options • Easy choice • Several equally desired options • Difficult to choose • Whether or not to choose at all • May lead to choice delay

29. Real World • Timing of purchasing decisions • Rarely fixed or predictable • Option of not choosing usually available • Defer-choice options • Seeking more information on alternatives • Searching for new alternatives

30. Theoretical Approach • Rational theory of search • No-choice option chosen when none of the alternatives are attractive or there are benefits to continued searching • Predecisional processes • Select no-choice to avoid making difficult trade-offs

31. Completeness Assumption • Completeness assumption • Consumers have complete access to choice information and that information processing is costless • In reality • Consumers rarely have complete information on all brands • Either unavailable or impossible to process • Information gathering/processing is very costly • Time, resources, effort, etc.

32. Preference Assumption • Preference ordering • Consumer has definitive preference ranking between options • Determines if one item is as good as another • In reality • Decisions made not through clearly ranked preferences but due to forced choice • May narrow choice to the extent that consumer is unable/incapable of discriminating relative differences • Indecision

33. No-choice Option • No-choice selected when • None of the alternatives are attractive • When search may produce better options • Consumer is unaware of full range of potential alternatives • Research should distinguish between these conditions

34. Distinction • Indifference • Don’t care which option is obtained • Random choice • Indecision • Not ready to make a choice

35. Choice deferral Expanding choice set by: adding new alternatives changing decision task for same alternatives Role of preference uncertainty on no-choice Tested predictions regarding purchasing for different choice sets Used verbal protocols to understand decision processes Manipulated decision task to change effect size Dhar (1997)

36. Results • Expanding choice set size with attractive alternative • Increases preference for no-choice option • Adding inferior alternative • Decreases preference for no-choice option • Shouldn’t have an effect, based on trade-off hypothesis • Suggests decision to purchase is influenced by need to clearly differentiate between alternatives • Decreasing differences in attractiveness between alternatives increased preference for no-choice option

37. Applications • Attractive/unattractive options • e.g., decision made in-store • Providing instant “special discount” • Makes alternative less attractive • Makes choice decision easier • e.g. Realtors showing several unattractive houses and one attractive house • e.g., Advertising • Brand compares itself to another, less attractive brand

38. Delay • Active decision time (ADT) • Time on info gathering, alternative comparison, place to purchase, etc. • Doesn’t explain excessive delay in purchase • Total decision delay time (TDDT) • Total elapsed time between need recognition and purchase • Includes ADT • Delay closure

39. Timing Features • Temporal “reference point” • Consumers demand higher reward to delay consumption past this point • Order of outcomes • Consumers prefer pleasant experience after unpleasant experience

40. Greenleaf & Lehmann (1995) • Interviewed business graduate students • Reasons for delaying purchase and for delay closure • Major ($100-200) items • Delay of at least a month • Factor analysis of responses

41. Too busy to devote time to decision Shopping is unpleasant Performance and financial risk Social and psychological risk Need someone else’s advice or consent Gather information Change in market Uncertain need Cannot afford to purchase Substitute available at home 10 Factors in Delay

42. Found time to make decision Tired of shopping Obtained advice or consent Decided which alternative to choose Price lowered Need increase Justify expenditure Word of mouth Good store 9 Reasons for Delay Closure

43. Delay Reasons and Attribution caused by external factor await market change sub. at home need info. uncertain need Locus of causation for delay perf. & finan. risk time pressure can’t afford need others’ advice shopping unpleasant caused by me related to making decision not related to making decision Related to decision

44. Study Limitations • Graduate students • May not generalize to other sections of population • Some delay reasons omitted because rare • e.g., procedural uncertainty; could be very significant in some situations (completely unfamiliar product)

45. Deliberation Process • Decision making process • Careful consideration of options • Weighing of alternatives • Expectation: increased satisfaction with choice • Reality: sense of making incorrect choice • Attractiveness of unchosen option increased post-choice

46. Option Attachment • Consumer considers decision closely • Selecting between options • May feel discomfort, not satisfaction, upon choice • Deliberation makes consumer attached to options before selecting from them • “Prefactual ownership” of options

47. Carmon, Wertenbroch & Zeelenberg (2003) • Scenario-based study • Effects of • Proximity to options • Duration of deliberation • Hedonic vs. utilitarian choices • Prior ownership

48. Results • Post-choice loss due to perceived increase in value of non-chosen option • Not a decrease in attractiveness of selected option • Longer deliberation --> increased option attachment • Greater exposure to options, more invested • Effects of delay • No choice option to avoid sense of loss