1. The document discusses decision rules that consumers use when purchasing cars, such as compensatory and non-compensatory rules. Compensatory rules allow trade-offs between attributes, while non-compensatory rules do not.
2. It provides examples of how different decision rules may be applied in car purchasing, such as using the lexicographic rule to prioritize price before other attributes for a used car. Consumers also often use weighted compensatory rules to evaluate multiple important attributes of new cars.
3. A survey found that brand name and price are the two most important attributes for car purchasers in Pakistan, though other functional and hedonic features are also considered, explaining preferences there for
1. 1February 277 2016
APPLYING DECISION RULES
TO CAR PURCHASING
Khairunnissa Virani
University of Waterloo
Human brain and behavior are two very interesting and extraordinary components. Looking
through a consumer’s lens, I perceive them as being significantly variable from person to
person and subjected to complexity. My point can be justified by the fact that even for making
a purchase, irrespective of its nature, a person or consumer goes through an extensive decision
making process, which is classified into five steps; Problem identification, Information search,
Alternative evaluation, Purchase and Post-Purchase (Social Media Marketing by Tuten &
Solomon). It is during the evaluation of the alternatives a consumer makes choices,
comparisons and applies decision rules.
Decision rules are different from decision process. A consumer uses these rules to facilitate
their complex, consumption related decision process and, are applied to a consumer decided
set of brands or choices. These choices are tested against an evaluative criteria consisting of
multiple utilitarian and hedonic attributes/ features important to the buyer. There are two
primary decision rules – Compensatory and Non-Compensatory; the former being sub-
categorized into Simple Summated and Weighted and the latter into Conjunctive, Disjunctive
and Lexicographic.
Under compensatory decision rule, all the attributes made part of the evaluative criteria are
weighed and rated for each brand in consideration. This rule allows a lower rating or negative
evaluation of one attribute to be balanced out by the higher or positive evaluation of the other.
The consumer; if taking the simple summated approach, simply totals the attributes’ score and
decides on the brand with highest score, on the other hand for weighted the consumer will first
weigh each attribute relative to its importance and then rate each, eventually deciding on the
brand with highest calculated score.
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Contrary to compensatory, non-compensatory decision rule does not allow the act of balancing
between the attributes, and one negative or low ranked attribute can disregard the particular
brand in consideration. Under conjunctive rule, a brand or model that falls below the consumer
set minimal acceptable level (cut-off) for any of the attributes, is eliminated from further
consideration. Disjunctive rule is exactly opposite of conjunctive rule, any attribute scoring
higher than the set minimal value can result in that particular brand be selected by consumer
for further consideration or even as the final decision in some cases. For lexicographic decision
rule, consumer first ranks all attributes according to their perceived importance and then
compares all alternatives in terms of the most important attribute. Any brand scoring
significantly higher for that most important attribute is selected directly and the decision
process halts. If in case of equal or competitive scores between two or more brands, the process
is repeated with the next highly ranked attribute and this carries on till a final decision is made
by the consumer.
The type and complexity of rules applied for a purchase decision depends on the nature of the
purchase process and the level of consumer involvement in it. Purchasing a car is type of long
term commitment purchase and a consumer, such as myself, always has a very high level of
involvement in it. In my point of view, a car purchasing decision is always multi-attribute and
often primarily uses compensatory decision rules over non-compensatory for inference. Since,
purchasing a car is not a frequently repetitive act, the purchasers put in a lot of effort gathering
information and details prior to the actual evaluation. The automobile companies and
marketers, special beginners, need to have a sound knowledge and understanding of the
situations and consumer behavior and rules. Hence, in this paper aims to explore and
rationalize the theory presented.
According to a survey, consumers typically place four to six different attributes as criteria for
evaluation between car brands. Some of the key factors such as cost, features, benefits and the
projected length of car ownership may have a considerable influence on what kind of a brand
or a particular model of a brand would one purchase. Every factor holds a certain weightage
and consumers then tend to balance out negatives by positives of one another. Hence, to further
my point a consumer usually considers weighted compensatory decision approach.
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One of the articles by Kath Straub mentions compensatory decisions as “rational” as “they
involve identification of complete set of attributes that could impact the success of choosing
of the available options – including both positive and negative impacts”. Although, in some
situations people also use non-compensatory or eliminative decision rules in combination with
compensatory rules to aid and/or fast track the decision process or simply because some
consumers may find collecting and comparing all of necessary data too intensive. This can be
true for when purchasing a used car or a specific model of a particular brand, where
lexicographic rule can be used with price, for example, being highly important attribute and
any used car scoring high in that criteria, means low priced, can be directly selected. On the
other hand conjunctive rule can be used in coalition with a weighted compensatory rule to first
eliminate any model that falls below the set minimal value and the others extrapolated could
be weighted for other attributes and scored accordingly.
Let’s consider a situation where consumer is evaluating a particular brand that he recognizes
against other less or un-recognized brands. An experiment for recognition heuristic conducted
by Onvara Oeusoonthornwattna and David R. Shanks at University College London, tested
non-compensatory processing when; 1) Two brands were presented one recognized and other
not, without price knowledge, 2) Two un-recognized brands but one was priced slightly lower.
As a result when prices were unknown people selected their recognized brand and for the
second scenario people took the price into consideration. The extensive experiment revealed
that despite of recognition being a powerful driver of preferences, it is processed in a
compensatory way and is found to be collective with other attributes in preferential choice.
Although a car brand is perceived to represent a person’s lifestyle, economic and status symbol
yet, cost, performance, reliability, engine strength, size, style, color, running costs etc. are also
a set of considered attributes.
A survey carried out in Pakistan showed a car’s brand name to have a high priority (34%),
while price as being the second highest weighed attribute (30%) and others following, as shown
in table 1.0. Part of the same survey made comparison between reputable multinational brands
common in Pakistan, namely Toyota, Honda & Suzuki and the result showed ‘Suzuki’ as
highly preferred brand. This may have been the result because of many consumers eliminating
the other two competing brands in terms of being high priced, however, the brands in
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consideration have a broad range of models to offer, hence, despite of price as just being the
key attribute, the quality, design, size, shape and other functional and hedonic features must
have been weighed and evaluated as Suzuki, being a Japanese brand, does a decent job in all
areas.
Table 1.0
Different conditions in which a car is purchased may occasionally have a combination of non-
compensatory and compensatory decision rules being applied but, a consumer who always has
high interest in this long term and costly purchase will have their research done quite
extensively and it's rare to see them ridiculing or selecting any brand directly and basing their
decision on a single attribute. Every automobile company, when launching a new car brand,
needs to consider different criteria a consumer can select for evaluation and how they can be
weighed and score according to the compensatory rules applied.
