Merchandising, Choice, and Shopper Satisfaction

Wharton's Barbara Kahn explains her new research on how merchandising layouts affect buying behavior as well as shopper satisfaction.

Generate Multiple Frames to Make Better Decisions

How you frame a situation helps to determine the types of options you consider and the ultimate decision that you make.   By frame, I mean the way that you characterize a situation.  We face a complex and messy reality.  We simplify those situations by adopting mental models and frameworks.  Those frames can be powerful in helping us make sense of that messy reality.  However, how you frame a situation can constrict the range of alternative solutions that you generate and analyze.  To broaden the range of alternatives generated, managers should seek to frame situations in multiple ways.  For example, suppose that a firm has experienced high employee turnover.   A leader may frame the situation as an incentive problem.  However, that framing would focus his or her team on potential solutions such as changes in compensation.   A better approach would be for the leader to offer multiple frames of the situation.  He or she might ask: We might say that we have a turnover problem, or perhaps we might cast the issue as a talent management problem.  In other words, we don't simply have a talent retention issue... perhaps we have a recruitment challenge, a development problem, etc.   Framing the problem in a broader way might lead to a very different type of discussion.  If you are in a situation where you feel that the range of options being considered is particularly narrow, consider reframing the problem. 

Do We Favor Quick Decisive Leaders and Penalize Slower, Deliberative Thinkers?

Stanford Professor Zakary Tormala, doctoral student Daniella Kupor, HBS Professor Michael Norton, and Kellogg Professor Derek Rucker have conducted some new research about how we react to the decision processes of others.  They asked the question:  Do we favor those who we perceive as quick decisive leaders and form less favorable impressions of those who engage in a slow, deliberative thought process?  Their research suggests that the answer is not black and white. Our impressions depend upon the situation.  If someone faces a very challenging decision, then we look for and are impressed by a thoughtful, comprehensive decision-making process.  On the other hand, if someone faces a very easy choice, then we think less favorably of that person if he or she labors over the decision.  In short, we want to see people match the comprehensiveness of the decision process with the complexity of the situation.   The Stanford story about this research summarizes the main conclusion as follows: "In general, people seem to be less drawn to and less open to being influenced by individuals who overthink small decisions or 'underthink' big ones." 

Understanding Cultural Differences: The Michigan Fish Test

Check out this image. What do you see?   

Source:  Richard Nisbett via CNN.com

In this article for CNN, Columbia Professor Sheena Iyengar describes how people of different cultures view this picture quite differently, and she explains what that tells about important cross-cultural distinctions.   Iyengar is an expert on cross-cultural differences in decision-making processes.  Here is an excerpt:

The image here, known in psychology as the Michigan Fish Test, was presented to American and Japanese participants in a study conducted by Richard Nisbett and Takahiko Masuda.  In their five-second viewing, Americans paid more attention to the large fish, the "main characters" of the scene, while Japanese described the scene more holistically. For Americans, the large fish were the powerful agents, influencing everything around them. For Japanese, the environment dominated, interacting with and influencing all the characters.  After the initial test, the researchers offered participants different versions of the fish picture, with some elements changed and some not. With the altered pictures, the Japanese were more likely to notice changes in the scenery or context. The Americans, on the other hand, proved adept at recognizing the large fish wherever they appeared, while the Japanese had more trouble recognizing the fish in new contexts, outside the original environment.  So members of two different cultures--the more individualist Americans and the more collectivist Japanese--"saw" the pictures with differing emphasis on individuals, the environment, and how these elements interacted. The divergent accounts point to differing narratives of what controls what in the world, and how individual people fit into it.

For more on Iyengar's own research comparing how Japanese and American children approach choice, see this earlier blog post. 

Should You Examine All Your Options At Once?

Stanford Professor Baba Shiv and Columbia Professor Sheena Iyengar have conducted some interesting new research about consumer decision-making processes.  They created a series of experiments to examine whether consumers were more satisfied when they examined all their options at the same time, versus looking at the options sequentially.

Their experiments involved the purchase of products including wine, chocolate, and nail polish.   The research findings showed that, "Sequential choosers were less satisfied with their chocolates than were participants in the simultaneous group. And, when offered the opportunity to switch to a different chocolate — a randomly selected one, they were told — more of the sequential choosers opted to do so, even though they knew virtually nothing about it."

What explains the higher satisfaction on the part of those examining all their options at once? The researchers argue that hope and regret play a significant role.  People in the sequential situation worry about possible future options (subsequent and unknown) that they may forgo by making a choice now.   People don't seem to have that worry when they examine a wide array of alternatives simultaneously. 

Decision Quicksand

The Wall Street Journal reported recently on a new study by Professors Aner Sela and Jonah Berger about what they describe as decision quicksand. These scholars compared the approach individuals took on three types of decisions: hard, important choices; hard, unimportant choices; and easy choices. The scholars found that individuals spent the most time on the difficult, but unimportant decisions! Moreover, happiness declined as the length of the decision-making process increased. it reminds me of what a former dean once said to me: "Academics find a way to argue the most over the decisions that matter the least!" Well, it appears that trivial choices trip up many people, not just hopeless professors.

Do we complicate easy decisions unnecessarily?

Knowledge@Wharton has profiled a new paper, "Complicating Choice," by Wharton marketing professor Rom Schrift and co-authors Oded Netzer and Ran Kivetz of Columbia University.  They find that consumers tend to feel that a certain amount of effort should be associated with making a buying decision.  The notion comes from people's belief that hard work pays off, and that a lack of appropriate effort will lead to a bad outcome.  If a decision appears "too easy" to us, we sometimes come to the conclusion that the seemingly obvious choice is "too good to be true."   As a result, we over-complicate the decision.  We make it more complex in order to make ourselves feel as though we have exerted appropriate effort.  Of course, such over-complication may lead us to choose a less desirable option or to waste time and energy.   We may end up moving far too late and missing a golden opportunity. 

The scholars discovered three ways in which consumers over-complicate easy decisions.  First, they "make the unimportant important."  In other words, they end up deliberating about an attribute that they didn't even care about at the initial stages of the decision process.  Second, they make two alternatives appear more equal than they actually were.  Third, people actually alter their preferences about specific attributes of one of the the options in order to make their decision harder.