So far we've been talking about consumer decision making, in terms of a series of methodical steps that the person goes through to arrive at a solution to a problem. But of course, lots of decisions don't follow such an orderly process. Instead, many consumer decisions are made out of habit or with the help of well learned rules of thumb. Common sense tells us we don't undergo this elaborate sequence, every time we buy something, we'd never get anything else done. A bit habitual decision making describes the choices we make with little or no conscious effort. And these choices often are made through the use of heuristics, which is a fancy way to say mental shortcuts.

And this brings up an important distinction that economists To make between maximizing versus satisficing economists assume that the individual will do whatever it takes to arrive at the best possible outcome. That is, that person will maximize their choice. But in fact, there are a lot of situations where we're just not willing to engage in that kind of trade off. And so in those situations, we say, well, we'll just do whatever it takes to avoid anything below a minimum level of a problem. So in other words, we satisfice rather than maximize. So social scientists who study this issue, refer to this process, which is basically a trade off between effort and outcomes as bound Did rationality another way of saying well, it's close enough.

So the way that we can avoid putting in all that time and be pretty sure that we're going to come up with at least a reasonable result is by employing mental rules of thumb or heuristics. So one commonly used juristic is higher priced products are higher quality products. If we know nothing else about two products, one is priced higher than the other, we assume that it must be a better quality. Even though all of us know that that's not necessarily true. Another heuristic, buy the same brand I bought last time. So rather than thinking about the issue every single time you need to buy the brand.

You just throw it into your cart because it's a familiar purchase. By Domino Random sugar My mother always bought. So when we look at college students, for example, who often are setting up a household for the first time, it's not that unusual to find that they're going to go out to the store and equip themselves with many of the familiar brands that they remember from their mother's kitchen. Another rule of thumb is covariation. And this means that we assume that if some aspects of a brand are positive, the others that we don't know about must be positive as well. A great example is when someone sells a used car, and they go out of their way to wash the car and shine the car and make sure that the exterior looks as good as possible.

Many people assume that if the exterior looks so great, the engine must run perfectly as well. Obviously, that can be a dangerous system. But it's one that we're tempted to make. Another widely used heuristic is to rely upon country of origin. That is, we learn to associate certain attributes with different countries. German cars are better engineered Italian cars are more stylish.

Japanese cars perhaps are more reliable. It's not unusual for marketers to exploit this particular heuristic by creating a brand that implies a particular country of origin because the marketers know that consumers will fill in the blanks and assume that the brand has certain characteristics. A nice example is Haagen dazs ice cream. So for many people, that Scandinavian country of origin implies that the ice cream must be higher quality and fresh and lots of other good Things like that. Of course, many people may not be aware that Haagen dazs is a totally made up name. And it's manufactured in of all places, New Jersey.

Familiar brand names constitute probably the most powerful heuristic of all. And this helps to explain why marketers work so hard to create a really solid brand image and indeed, that brand personality that we talked about in other modules. Is this a good strategy? Well, it looks like it sure is. In one study of familiar brand names. The researchers found that of the market leaders in 30 product categories 27 of the brands that were number one back in 1930, such as Ivory soap, and Campbell Soup.

Still were at the top of the heap more than 50 years later. This familiar brand name heuristic brings up an interesting question. When a person buys the same brand over and over, does this mean it's just a habit? Or is that person truly loyal to that product? And indeed, we can't necessarily be sure just by knowing that those purchases have been made. So we have to make an important distinction here, between inertia, which is essentially do the easiest thing that you can and true brand loyalty.

In both cases, the behavior may be the same. That is we witness a pattern of repeat purchases. But the underlying motivation for those purchases can be very, very different. And this reminds us of what I said at the beginning of this Court, which is that it's not enough to know what a person does. We have to know why they do it as well. A good litmus test here is to ask what would happen if the person goes to the store and their favorite brand is not available?

Will they wait or go to another store to buy that favorite brand? Or will they just buy another brand that they find on the shelf. As you might imagine, if a person is truly brand loyal, they're probably going to hold out for their preferred option. Whereas a person who is buying due to inertia is not going to miss a beat, they're just going to throw another brand into their cart, because that now becomes the easiest solution to their problem. So these are two very different consumers, even though both under normal circumstances will buy the same brand. The takeaway here is don't assume that your repeat customer is necessarily a loyal customer.

Don't take this person for granted.