It's Just Breakfast

Theories of rational decision-making often focused on a very narrow and informed decision: an individual must choose between two options and has complete information about both – hence he makes a logical decision based on the likelihood of each option to achieve a desired outcome.

In an actual purchasing situation, the customer has a very complex decision and little information.    In a typical American supermarket, there may be 100 or more different options in the breakfast cereal aisle.   The customer is not an expert in breakfast cereal, and knows only a little bit about some of the options and nothing at all about most of them.   

And while the ostensible problem the product solves is nutrition, there are many other concerns: would a young adult male consume a cereal that is primarily marketed to elderly women?  What would his friends think of him if they saw it in his cupboard?

So in the cereal-buying situation, and virtually every consumer decision, the consumer is not able to act as the perfectly rational and perfectly informed individual that are presumed by the logical decision-making process.   

This is not to say it is not possible: one can study about nutrition, learn about all 100 breakfast cereals on the market, document the decision-making process to carefully exclude any subjective or nonsensical criteria, and so on – but it is not at all reasonable to expect anyone at all to put in that level of effort.   

It’s just breakfast, after all.

Propaganda and Customer Education

It’s generally held that the amount of time that a customer will spend educating himself about a purchase is proportional to the risk involved in the purchase – i.e., a high probability of disappointment, particularly where there is such a significant investment of cost or emotion that making a bad decision will be damaging.    This seems to make perfect sense, but there is still the notion that customers make even major decisions by gut-feel.  I’ve researched the subject a bit, and have unconverted some interesting details:

First of all, there is a great deal of disagreement on what qualifies a customer as being “educated” about a product.   The general sense is that the customer has gathered enough information and analyzed it to the point where he makes the correct decision.   But the “correct” decision seems to be highly subjective: it is the decision with which the assessor agrees.   Ask any salesman or marketer, and the only correct decision is for the customer to purchase their product.

The best test of the correctness of a decision is the outcome – the solution solved the problem that motivated the customer to make the purchase.  Or said another way, that the customer is satisfied with the purchase.   This, too, is difficult to assess because customers who respond to satisfaction surveys most often give positive responses to justify their past decisions: admitting they were wrong or foolish, that they decided to purchase a product that turned out to be useless, is a shame that many people have difficulty admitting.

Ironically, this suggestion that customers overstate their satisfaction is followed immediately by the suggestion that they are often dissatisfied: that most customers make uneducated decisions and end up being disappointed by a brand, but place the failure of their decision on the brand itself: they claim the product is bad whereas it is really the wrong product because they made the bad decision.   

So it seems that a customer who didn’t buy their brand is uneducated, but so is the customer who bought their brand and is dissatisfied.   The only customer a firm will consider to be educated is the one that purchase their brand and expressed satisfaction with the decision.   It’s difficult to tell whether the sellers or the buyers are in a state of utter denial.

A second point of interest is the degree to which information sources are reliable.   One author cited a survey conducted by Ogilvy One Worldwide that suggested around 70% of the sources that customers use are “deceptive and useless” and provide “the wrong kind of information.”   But again, there is the subjectivity defect, as this was a survey among salesmen whose reaction is skewed to regard any source that does not support his brand as being a bad source – and further, that the salesmen are unlikely to know what sources a customer actually consulted.

There once was the sense that the Internet is full of mostly bad information that is misleading to the public – but this is a distortion.   There are indeed many bad sources of information, but they are not considered reliable by customers: they are quite capable of assessing the value of a source, recognize that someone’s opinion on Twitter is not as valid as the information on an academic or industry organization’s site.

The greater problem with sources is that they are simply not consulted: people make gut-feel decisions and do not bother doing research.   But it remains unclear whether they are doing so for purchases in which there is sufficient risk to merit that level of rigor.   Again, industry insiders feel that their products or brands are very important and customers ought to invest significant time in researching them – but this is not the way that actual customers feel about their products and brands.

I was only able to devote a few days to this research, but during that time I did not find a single source that seemed objective and reliable – so while I’m left without an answer, the experience has left me very suspicious about the entire topic of customer education.  Whether a given source believes customers to be educated or uneducated probably has more to do with the bias of the source than the behavior of the customer, and should be viewed with a jaundiced eye.