Non-Compensatory Decision Rules in Consumer Behavior
Where Do Non-Compensatory Decision Rules Fit into Consumer Behavior?
When making purchases, all consumers will work through the buyer decision process as follows:
- Need recognition
- Information search
- Evaluation of alternatives
- Post-purchase behavior
Decision rules (or the approach used by consumers) will occur in the ‘evaluation of alternatives’ stage. This is because a decision rule/approach will help the consumer choose between competing alternatives.
In particular, decision rules are more important in mid to high involvement purchase decisions. By having an understanding of how consumers make decisions, marketers can better structure their marketing mix elements.
What is the difference between compensatory and non-compensatory decision models?
Compensatory models look at the overall product offering considering all product attributes. This means that strong attributes can make up for weak attributes when consumers evaluate their choice.
This will occur in the “evaluation of alternatives” stage of the buyer decision process.
In terms of the overall product offering, this means that stronger attributes can compensate for the weaker ones in the consumer’s decision.
Non-compensatory models are where the consumer considers individual product attributes that are important to their purchase – not the overall offering. This is a more common approach to decision making.
How Do Non-Compensatory Decision Rules Work?
An Example of a Consumer Buying a Laptop
Let’s work through the purchase of a laptop computer and how adopting different decision rules can lead to different purchase (choice) decisions.
In turn, we will consider these main non-compensatory rules:
Please note that there is also a summary video available at the end of this article.
To help us understand these decision rules, let’s first start with a list of the various product attributes that we want to consider. And for each of the attributes we would assign an importance score, depending on our needs and preferences, as well as a score for each brand for each attribute.
This is shown in the following table:
How the Table Works
- We start with a list of the product attributes that we want to consider
- We then score the importance of each product attribute (scored out of five points in this example)
- We then also score each of the brands out of five (or another number of your choosing) for all the brand we are evaluating (in this example, we are looking at Brands A to D)
- And we then multiply each brand’s attribute score by importance – for each attribute – and then add up the scores to get a total score (which is used for the compensatory decision rule).
Using the Conjunctive Decision Rule
When a consumer uses the conjunctive decision rule they set a minimum score for each product attribute being considered. This means that product MUST meet the minimum score on all the attributes that they want in the product.
Once we have those minimum scores (or expectations) the consumer will then work their way through each product attribute.
For example, let’s assume that a consumer wants a score of at least 3/5 on EACH of the product attributes listed in the above table.
And as shown in the table, Brand A only scores a 2/5 on storage (and also price) so that is ruled out as a possible choice. Likewise with Brand C, which scores 2/5 on ram so that is ruled out as well.
In this example, we will end up with two suitable brands – either Brand B or Brand D – which we then need to choose between (perhaps using another decision rule).
Recap: Conjunctive Decision Rule = we want a minimum level of performance (score) for EACH product attribute.
Using the Disjunctive Decision Rule
A disjunctive decision rule is when we’re looking for a minimum score on ANY of our key attributes.
Because we are looking at a limited list (e.g. ANY attribute), we will typically set the minimum score higher than we would have set for the conjunctive decision rule.
As an example, let’s assume that a consumer sets a minimum score of 5/5 for any of the two product attributes of:
Note that the consumer is only using two attributes in their choice, as these are the must-haves for their purchase. And as the other attributes are unimportant to the consumer, they are not going to be considered in the purchase decision.
Again, looking the above table, we can see that:
- Brand A scores 5/5 for the processor – making it a suitable choice
- Brand B scores 5/5 for weight – also making it a suitable choice
- Brand C does not score 5/5 for either of these two attributes – making it as unsuitable choice
- Brand D also does not score 5/5 for either of these two attributes – making it as unsuitable choice
This leaves us with either Brand A or Brand B as the only two suitable choices for this consumer. Again, the consumer may need to use another decision rule approach to finalize their choice.
Recap: Disjunctive Decision Rule = we want a minimum level of performance (score) for ANY key product attribute.
Using the Lexicographic Decision Rule
Let’s now look at the lexicographic decision rule. With this approach, we start by ranking the product attributes in order of importance to us.
In the above table, there is an importance score listed for each attribute. As you can see, both processor and price are rated 5/5 in importance by the consumer.
Because we have two attributes scored 5/5 in importance, the consumer needs to select ONE attributes which is the most important attribute to them.
So let’s assume that the consumer lists processor as their most important attribute. That means that they will choose the laptop with the most powerful processor and they will ignore all the other product attributes.
In the above table, we can see than Brand A is the only brand that scores 5/5 for processor – making that the best brand choice for this consumer.
Recap: Lexicographic Decision Rule = we want the brand that is the best of the single MOST important attribute for us.
Using the Elimination-by-Aspects Decision Rule
The elimination-by-aspects decision rule works with both our importance rankings and our minimum scores (requirements) per product attribute.
In this case, let’s assume that we want a minimum score of 4/5 for each attribute.
We start with the MOST important attribute first and rule each brand in or out of purchase consideration.
As we have decided that ‘processor’ is our most important product attribute, we will start there.
In the above table, we can see that Brand B only scores 3/5 for processor – so we immediately eliminate that brand as a suitable choice. It is ruled out completely and we do not even consider any of its other product attributes.
Then we now only have three brands left to review, We then move to our second most important attribute – which is price. Here we will rule out (eliminate) Brand A completely, as it only scores 2/5 for price.
This leaves us with Brands C and D only. Think of it like being eliminated from a reality TV show – the brand is removed from any further consideration.
We then move to our third most important product attribute – and let’s say that is RAM.
Here we would eliminate Brand C, which only scores 2/5 for that attribute – leaving Brand D as the ‘winner’ and the brand that the consumer will chose.
Recap: Elimination-by-Aspects Decision Rule = we work through the attributes in order of importance and eliminate brands that do not meet our minimum expectations (scores).
What Brands were Chosen per Rule?
Let’s review our product choices per decision rule:
- Conjunctive = we chose either Brand B or Brand D
- Disjunctive = we chose either Brand A or Brand B
- Lexicographic = we chose Brand A
- Elimination-by-aspects = we chose Brand D
As you can see, potentially three different brand choices were suitable, depending upon the decision rule utilized by the consumer.
This is why different brands and products are chosen by different consumers – they have differing needs, perceptions, and they use differing approaches (rules) to decision-making.
Summary Video on Compensatory and Non-Compensatory Decision Rules