Overview

Heuristics, or rules of thumb, are routinely used by consumers when evaluating a number of product alternatives prior to purchase. By using one or any combination of the various heuristics, the consumer is able to systematically screen and evaluate the products available for purchase; thus saving time and energy.

While some rules may be as simple as “buy American,” or “always buy the least expensive,” the actual process that a consumer uses to apply these rules may, in fact, be quite complicated.

Examples

Although researchers are not certain exactly how many heuristics consumers use, ten basic categories are generally accepted. Which precise rule or rules are used by the consumer is contingent upon the task, the particular situation, and the individual.

The majority of heuristic rules can be broadly classified as either compensatory or noncompensatory. In compensatory heuristics, a negative product attribute such as a high price or poor quality may be offset by a positive ranking on another product characteristic such as a free installation or a strong warranty.

That is, brand strengths may compensate for product weaknesses. Using the linear compensatory heuristic, for example, product alternatives are described through multiple attributes and then these scores are either added or averaged. Since each product is evaluated by the sum total of its attributes, information processing occurs by brand comparison.

A noncompensatory rule, on the other hand, automatically eliminates any brand in which one attribute is considered unacceptable by the level of standards set by the consumer. Hence, noncompensatory heuristics are frequently used in conjunction with other decision rules as a method to winnow the choice set to a more manageable number before evaluating the remaining products in greater detail.

Using the conjunctive heuristic, just one example of a noncompensatory rule, minimum acceptable standards are specified for each product dimension. If a brand does not meet the minimum cut-off point, it is automatically eliminated regardless of how well it might rate on other attributes.

Another example of a noncompensatory heuristic is the lexicographic rule in which attributes are sequentially ordered in terms of importance to the consumer. Product choices are evaluated on the basis of the most important attribute.

If two or more products are evaluated similarly, the consumer then compares them on the basis of the next most significant attribute until the tie is broken and one brand is preferred. Note that, unlike a compensatory decision rule, a high value on one attribute can not compensate for a weakness on another product dimension.

In addition to the linear compensatory, conjunctive and lexicographic heuristics, consumers also use other heuristics, including affect referral, general information, disjunctive, sequential elimination, elimination by aspects, lexicographic semiorder, and additive difference. These heuristics vary in information required and processing difficulty.

Benefits

Heuristics provide the time and value conscious consumer with a road map for decision-making – a mechanism for the efficient search and evaluation of competing product alternatives.

Without the guiding influence of heuristics to streamline the choice process, one of two clearly unacceptable behaviors would dominate:

consumers would suffer from frustration and information overload caused by the incomprehensible task of synthesizing all available product information, or
the choice process would be reduced to one of mere random selection in which no information is processed and no brand preferences are developed.

Thus, by mediating these two extremes, heuristics enable the consumer to:

1. save valuable time and energy,
2. circumvent frustration and information overload, and
3. choose an alternative based upon salient and relevant criteria.

An understanding of consumer heuristics also benefits the marketer. By suggesting which heuristic the consumer “should” use, and by controlling the order and amount of product information, for example, the marketer can influence the choice process.

Implementation

In the study of heuristics, it is important to see how a consumer would apply a particular heuristic to make a purchase decision. As an example, suppose a consumer used a conjunctive rule to determine which calculator to purchase.

After collecting information on three different brands of calculators available, he then determines the minimum acceptable cut-off points for the attributes he considers significant in a calculator. Suppose

Brand A carries a 90 day warranty. By the standards set by the consumer, a one year warranty is considered the absolute minimum acceptable; hence Brand A would be eliminated as a potential purchase.

Suppose Brand B, on the other hand, carries a one year warranty, but was judged by the consumer to be rated as only fair in terms of functions. Since the consumer determined a good rating on functions was the minimum acceptable standard, Brand B would also be removed from the potential purchase set.

Finally, an evaluation of Brand C reveals that it carries a one year warranty as well as being rated excellent by the consumer in terms of calculator functions and is judged to be above the minimum standards set for the remaining attributes. Hence, Brand C would be purchased in this example.

The lexicographic rule extends the disjunctive rule so that additional evaluative criteria can be incorporated, if necessary, to make a decision. Thus, if a choice can not be made by using the most important criterion, additional criteria can be considered based on their importance to the consumer.

Using this decision rule, all brands would be evaluated on the basis of the most important criterion. Take for example, another hypothetical consumer desiring to purchase a calculator. Based on his budget, he has determined that price is the most important criterion for his choice of calculators. Suppose Brand A sells for $9.00, Brand B sells for $9.00 and Brand C sells for $12.00, and the individual has set $10.00 as the maximum amount he is willing to pay. Hence, Brand C would be eliminated as a viable alternative.

However, to decide between Brands A and B, the consumer would have to consider the second most important attribute. Suppose ease of use was considered to be the next most important attribute and that Brand A was evaluated to be very easy to use while Brand B was considered to be somewhat difficult to use. As a result, the consumer would choose to purchase Brand A.

It is important to note that the evaluation of product attributes is purely subjective. Hence, consumers using the same heuristic rules, and evaluating the exact same set of brands could conceivably choose different products depending on how each evaluates the different Brands’ attributes.

In addition, the hierarchy of attributes, which also affects the ultimate choice tends to vary from consumer to consumer. Thus it becomes obvious that individual characteristics play an important role in determining the final outcome of the decision.

Evaluation

It is not always clear which heuristic a consumer may have employed in a given situation, because the measurement of heuristics – like most other psychological processes – is a difficult task.

However, here is the outline of six methods used to study consumer heuristics:

1. Correlational methods, such as brand belief surveys, first ask respondents (i.e., consumers) to evaluate the attributes for a set of known brands. Next, respondents rate their overall preference for each brand. The researcher then estimates a separate brand evaluation score for each heuristic which he correlates with the consumer’s actual brand preference rating. It is then inferred that the heuristic with the highest correlation is the one actually employed.
2. Information integration approaches do not require respondents to reveal their own beliefs; rather respondents are asked to match specific belief levels with specific evaluation levels. Special analysis of statistical variance techniques is then used to determine the predominant heuristic.
3. Protocol methods require the respondent to think out loud as he shops. Comments are recorded and later analyzed to determine which heuristic was used.
4. Information monitoring approaches typically involve asking respondents to select pieces of brand attribute information from a display board arranged in a matrix fashion with each row representing a different brand, for example, and each column representing a different attribute. Respondents select pieces of information represented by the matrix cell values until they are able to make a choice among the brands. By analyzing the sequence of information selected by each respondent, the researcher is able to classify respondents according to the heuristic used.
5. Eye movement analysis involves the use of a sensing apparatus that tracks the consumer’s sequence of eye movements as he examines a number of product alternatives. The sequence of movements is then analyzed to determine which heuristic was employed.
6. Response time analysis may be applied by measuring the elapsed time required for a consumer to select a product from a group containing several choices. The longer the elapsed time, supposedly, the greater the information processing effort required. Thus, some insights are gained as to the heuristic employed or the number of attributes evaluated.

Conclusion

Not only can heuristics help consumers simplify the decision process, but they can also be helpful to marketers who can influence the purchase decision by suggesting which heuristics and which attributes the consumer “should” use. In studying heuristics, however, it is important to recognize when consumers are most likely to use them.

Many of the same factors that come into play when determining the amount of search activity to be undertaken also affect the use of heuristics. The more urgent the need, the more likely a simplistic heuristic such as “buy American” will be used.

In contrast, the more significant the product or the more complex the alternatives, the more likely complex heuristics will be used.

In addition, consumers do not always use the same decision rule; consumers will tend to apply different rules under different circumstances. Also, the use of two rules to make one decision is not uncommon; protocol analysis studies have found that consumers may use a noncompensatory heuristic to initially screen alternatives followed by a compensatory rule to evaluate the remaining alternatives.

Finally, it is important to remember that heuristic research is still in its infancy. Additional research is necessary to fully understand the heuristic concept, how it is applied to consumer purchases, and how marketers may best benefit from an understanding of the topic.

Applications to Small Business

Small businesses – especially manufacturers and retailers – are currently in an advantageous position to successfully apply heuristic theory. Capitalizing upon consumer heuristics must begin with the recognition of three key points.

• First of all, the consumer’s choice of a particular brand often depends upon which heuristic is employed and/or upon which product attributes the consumer considers relevant when implementing the heuristic.
• Secondly, an individual consumer may, over time, utilize several different heuristics and several different attributes.
• Finally, the selection of specific heuristics and attributes depends upon several task, situation, and individual factors.

By manipulating the marketing mix, the small business marketer can influence some of these factors—and thereby influence the choice of heuristics and attributes, as well as the purchase decision itself.

Of course, many task, situation, and individual factors are beyond the influence of marketing action, but some are not. For example, the marketer may be able to manipulate the amount of pertinent information processed by the consumer, and the order by which it is processed.

To illustrate, if a small business manufacturer believes his brand to be the overall superior brand, he might advertise and promote the importance of several “equally critical” attributes, thus prompting the consumer to select one of the compensatory heuristics and weigh brands according to the touted attributes.

Conversely, a competitor whose brand was clearly superior on only one or two attributes might ignore or downplay the other attributes in hopes that the consumer would apply the lexicographic heuristic.

A second factor the marketer might influence is the ease of obtaining product information. Sometimes the consumer will discount, temporarily bypass, or totally disregard otherwise key attributes if the information about those attributes is difficult to obtain.

The breakfast cereal shopper may disregard the price-per-ounce attribute, for example, if competing brands are packaged in several different sizes making extensive calculations necessary to determine the lowest price-per-ounce choice.

Finally, knowledgeable consumers with limited past experience in specific product categories are more likely to rely on the heuristics and attributes suggested by marketers. As consumers gain knowledge and experience with the product category there is tendency to utilize the affect referral heuristic and thus evaluate brands in a wholistic fashion: an overall positive, negative, or indifferent evaluation of each brand—regardless of specific attribute evaluations.

Consequently, the small business marketer should ensure that the consumer enjoys a positive first experience with the brand followed by the implementation of a brand-name recognition strategy.