An Analysis of Consumer Behavior Modeling from the Standpoint of Information Processing

No.138
July 2002
Research Fellow Seiji Shindo
Research Fellow Naoki Nagashima

1. When gathering information on the availability of products, their quality, and their prices, the greatest cost for time-starved consumers is the amount of time spent searching for information.
2. In cases where searching for information incurs opportunity costs, searches are very often aborted midway. Consequently, consumers are unable to make "optimal comparative evaluation based on the complete set of available options", and consumers' decisions are left up to simple decision-making rules (heuristics).
3. Methods of information gathering and decision making are dependent upon consumer involvement with goods. High-involvement goods elicit delicate decision making based on various categories of evaluation acquired through as much information gathering as is possible by the consumer. Contrarily, low-involvement goods invite simple decision making backed by very little information gathering at all.
4. Undeniably, modern day IT-and the Internet in particular-is helpful for consumers' information gathering. However, it is established evaluation criteria and personally acquired information, such as previous experience, that play the most important role in assisting the consumer in examining and comparing gathered information, as well as in information production activities that allow consumers to connect existing knowledge with decision making.
5. If we consider the time spent on aborted information searches, the time necessary for activities related to the reproduction of information gained through searches, and the importance of information accumulation occurring in said information reproduction activities (specifically, the importance of combining acquired information with previous experience), then it is clear that the spread of the Internet alone is limited in its capacity to mitigate transaction costs and alleviate the asymmetry of information.
6. As for business' methods of disseminating information, in the case of low-involvement goods and services it is useless to provide needlessly detailed information. Therefore, when providing information, it is necessary for businesses to trim off as much information as possible, while at the same time still attracting the consumer's interest.
7. In the case of information dissemination for high-involvement goods and services, it is vital for businesses to summarize and present a wide spectrum of detailed information, while at the same time take into consideration the importance of consumers' personal experiences when making decisions. Furthermore, it is vital that companies not rely solely on the Internet for disseminating information, but also supplement online information with other resources such as antenna shops, where consumers experience real interaction with goods and services that they can actually see, hear, and feel.

CONTENTS

1. Preceding Studies on Consumers' Information Search
2. Reality of Consumers' Information Search and Purchase Decision Making
3. Modeling of Consumer Behavior under Scarcity of Time

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