Study after study shows that self-reported preferences do not match buying behavior. Instead, seemingly irrational factors can influence consumer decision making. In an effort to better understand how buyers make their decisions, Itamar Simonson , associate professor of marketing, has been studying consumer behavior since 1987.
Consumers prefer alternatives that are compromise choices.
Given a choice between two alternatives, one priced lower than the other, the addition of a third choice, priced higher than both, will increase the market share of the more expensive of the original two. This finding suggests that companies can increase their overall sales and shift purchases to higher-margin items by carefully designing the sets of alternatives that their customers consider. Buyers are averse to choosing the lowest-quality alternative in sets of three or more choices. Consumers who think about the possibility that their purchase decisions will be wrong are more likely to choose better-known brands. Indeed, after thinking about the possibility of regret, consumers were more likely to select the better-known brand.