Academic researchers and practitioners have together created a rich field of research to help us build insight into factors driving why and how customers do what they do.  This research draws on research from psychology, economics and sociology, using a wide range of research methods.  A survey course like this one can only scratch the surface.   The following three models address some core initial hypotheses we might build about customer decisions in a particular market:

1. what kinds of core needs motivate customers observed jobs-to-be-done,
2. how habitual or involved is their thinking about solutions,
3. how might they progress through their decision-making process.

Core Needs: Maslow’s Hierarchy of Needs

Maslow’s hierarchy of needs is among the most well-known conceptual models of factors that motivate behaviors.  In the mid-twentieth century, Maslow organized human needs into five broad groups from the bottom to the top of a pyramid: physiological, safety, love and belonging esteem and self-actualization.  Maslow initially conceptualized these a hierarchy, hypothesizing that people needed to have needs at lower levels substantially fulfilled before turning their attention to higher level ones.

The hierarchical nature of these needs has been heavily debated.  There is clear evidence that physiological needs are very powerful and distracting motivators, often requiring conscious (System 2) thought to suppress.  Some researchers have framed the remaining four categories as being in tension with each other: our desires for love and belonging in tension with our desires for independence and being our unique self, and our desires for stability and control in tension with our desires for achievement, mastery and respect^[1]

Regardless of their relationship to each other, the categories themselves represent a very useful set of deep motivators.

Read this article summarizing Maslow’s hierachy of needs, how it can be useful and criticisms of it. 

Decision Involvement: Kahneman’s Dual Process Model of Cognition

The theory that we have two ways of thinking, formally known as “dual process models of cognition” has a long history in psychology and social psychology.  You may have heard about dual process models framed as “left-brained vs right-brained” or “rational vs intuitive” , “cognitive-experiential” or even “thinking vs feeling”.

Nobel prize winning researcher Daniel Kahneman and his colleagues have labeled these two modes of thinking “System 1” and “System 2”.  System 1 is fast-thinking, intuitive, and requires low effort.  It is our default thinking mode.  System 2  slow-thinking, deliberate and requires high effort.   System 1 helps explain why habits are such an important factor in marketing,  why we like things that people like us like, and why without conscious effort we can all revert to habits of thought that can introduce cognitive biases into decision making like those we discussed in Module 2.

This video review of Kahneman’s book “Thinking Fast and Slow” provides a brief overview of System 1 and System 2 thinking.

Decision Process:

There are many models of how customer decision-making happens.  Rather than drag you through yet another comparison of models from different research traditions, here’s a 3-minute video with a model I recommend that you consider using for this class. It captures essential elements that span many other models. Also included are some checklist categories for building some hypotheses.

A Model for Building Hypotheses about Customer Decision-Making

Here for your recommended use, in this class at least, is a model that I find useful for working on your project and thinking at a high level about how consumers make decisions. It has four steps in it.

You come to realize that you’re dissatisfied.

Then we go to search, and in search, we’re thinking about how might we solve this solution broadly? What kinds of things could I use?

And so I make a choice. I pick a particular brand to make my decision.

We do know enough from consumer behavior research to know that these two psychological processes are distinct. Thinking about what categories we should consider, and what brands we should consider are two different parts of our thinking when we make decisions. However, they’re very interrelated. These arrows go both ways. We might be dissatisfied, search for some solutions, realize that it’s too hard. The transactions costs are too high. So we come back and hang out and be dissatisfied.

Then if we make a choice, we evaluate our satisfaction with our new compared to our dissatisfaction in the current, and we update our expectations for what we’re going to do the next time we’re in this situation.

So that breaks this process down into steps that are inside the active buying process. We’re dissatisfied, we realize a need, we have this active buying process, we finalize a purchase and then we use and decide. Inside that part, we might have different amounts of time that we spend in this process, depending on if we have a habitual process that we’re using, depending on our involvement in the process.

As you think about developing your own hypotheses here’s some questions that you can use as a checklist to walk through thinking about, hypothesizing, about, or asking customers questions about their previous decisions.

This last slide takes the key themes from each question, breaking our insights into two categories.

Attraction vs Retention Hypotheses

The first category, what encourages people to adopt something new. From our perspective, if they’re adopting something new we’re getting them to switch from what they’re doing now. They were dissatisfied with their current solution and we want to get them to switch to our solution. These are the insights that are going to be really important to us. If we’re trying to get them to switch from what they’re doing now to our new solution.

If, instead, we’re trying to encourage people to stay with our solution, once they’ve, purchased for the first time with us and we’re encouraging people to stay, then our hypotheses about the relationships between customer experience, satisfaction, and loyalty become important questions about to what extent people share information. Why do they engage in word of mouth? And how often are they, how are they purchasing? These are some categories that we look at.