How psychology is dispelling the myth of the rational consumer

Thinking with their heart

A woman walks into a store. She sees two options for the milk she could buy. The first is regular, old milk. The second says Non-GMO. Automatically, she reaches for the Non-GMO option despite its hefty price tag. When stopped and asked why, she struggles to explain. When pressed on what Non-GMO means, she can’t answer. She really has no idea how or what Genetic Modification is, or what role it plays in the production of dairy. Finally, after much discussion, she admits she just “feels” like Non-GMO is the right thing to do for her kids. She can’t tell you where this feeling coming from. But it is not based on fact. It is not based on information. It is instead, based on emotion.

The more complicated the world grows, the more complicated consumers become. This is a common theme that is being shared by a number of psychologists in their analysis of consumers and how they make purchase decisions. And while rational thought plays a role in people’s day-to-day buying decisions, many psychologists are increasingly calling out the growing importance in how emotion is driving our buying behaviour.

We are hard wired to leverage our emotions.

Antonio Damasio, professor of neuroscience at the University of Southern California wrote a book Descartes Error. In it, he argues that emotion is a vital ingredient in almost every decision we make. Whether it is buying a new car or choosing a carton of milk, when we’re faced with a decision, our emotions from previous, related experiences assign value to the choices and influence our consideration. Even though we may not know it, these emotions create preferences which ultimately drive our decision. To arrive at this conclusion, Damasio studied people who had suffered brain injuries, that affected the connection between “thinking” and “emotion”. People who lacked this ability, could rationally process the information about different choices presented; but were stuck in almost a pause state, unable to finalize the decisions because they didn’t know how they felt about the options.

The Myth of the Rational Consumer.

In addition to drawing our attention to Antonio Damasio’s work, Peter Noel Murra, Ph.D., has published a number of interesting articles on the role of emotion in driving consumer behaviour. In his article The Myth of the Rational Consumer, published by Psychology Today, Murra contends that there are two major misunderstandings fueling this myth.

The first, is that consumers believe they are acting rationally in their own self-interest. The second, is that companies believe that consumer decisions are rational in nature and driven by the feature of the product, and not what the product represents.

While we completely suggest reading the full article, Murra points out two key problems that continue to perpetuate this myth.

1. Consumers’ Self Perception of Reality: Conduct a focus group or interview and ask a consumer to tell you if their purchase decisions are based on emotional drivers like the brand or values that the company holds, and they will describe themselves as completely rational, objective shoppers. We all want to believe we are strong, independent thinkers.

2. System Bias: Just like Brian Caplan discussed in his book, The Myth of the Rational Voter, consumer bias becomes clear when people over estimate how outside sources are impacting their decisions. The thought of these external factors playing a role makes us, as humans, feel like we don’t have control. Therefore, we reduce anxiety and uncertainty by rationalizing our choices.

Everything is an extension of who we are.

Technology has not just changed. It’s changed us. In a pre-digital age, technology was largely a rational, functional choice. As Murra states, we used to ask “What benefits and pleasures will I get from this product or service?” But Murra goes on to discuss how psychological research reveals that the Internet and smartphone technology have become more emotional than rational. While the consumer still struggles to articulate, they have moved from an objective to subjective relationship with technology. They are ruled by an unconscious question that asks “How does this technology express and enhance who I am.”

Technology isn’t alone. The same pattern can be seen in the Consumer Packaged Goods category. Murra sites more psychological research where consumers look to “match” a personality of a brand with the personality they use to define their sense of self.

Conclusion:

Murra summarizes the article saying there are three steps in the purchase decisions process. The process begins with overall perceptions about a category. Obviously, this is where the history of the brand, the marketing and corporate reputation play a key role in setting a positive foundation for consumers to want to engage with you or our product.

Next, Murra contends that the motivations and needs of consumers drive initial perceptions of an individual product and service options within the category. The challenge is that traditional research fails to uncover these motivations, as the consumers self-perceived reality and system bias skew focus groups and interviews. Fortunately, advances in research, specifically with methodologies like Digital Ethnography, mean that we can now remove the observation bias that can skew consumer studies.

Lastly, Murra reinforces that the perceived emotional end-benefits of owning and using specific products or services is what truly drives intent and purchase. This is a critical insight for everyone in Marketing, Innovation or Insight to consider. Because much like consumers showcase a system bias, so to do companies that assume their products are being purchased for functional or purely rational reasons. As psychology contends, we live in an era where what a product says about who and what I am is a critical component in the choice a consumer makes. My MotivIndex cofounder Ujwal Arkalgud had a term for this. He coined it the era of Belief Based Consumption. If we are to believe recent opinions from the psychological community, the time to rethink how we think about consumer behaviour is now.