How the consumer decision-making process is shifting

Mar 26 2021, 7:26 am

On a daily basis, we make hundreds of decisions in our personal lives and at work. Whether this be what we decide to wear, how we commute, what we eat, and everything in between; we are constantly choosing.

As UBC Sauder School of Business points out, when 7.7 billion people around the world are making individual decisions every single day, the impacts can add up to bigger societal problems, such as climate change and the obesity epidemic.

We’re living in a modern world designed for convenience, and with that, comes even more choice — options for fast fashion and sustainably designed apparel; gas-powered cars and electric vehicles; produce sold loose and in single-use packaging.

But for societal challenges to improve, we need to make choices that are better for ourselves and the world.

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To explore how consumers grasp the concept of sustainability, Katherine White, UBC Sauder Marketing and Behavioural Science professor, conducted multiple studies with her team. They presented three products (a granola bar, an eco-friendly tire, a cleaning product) to respondents with either sustainable or traditional features listed upon each.

What they found was that people who are more abstract (big picture) thinkers prefer sustainably positioned products. Meanwhile, the idea of sustainability doesn’t resonate as well with those who think more concretely (and want to know what’s in it for them).

In an interview with UBC Sauder, White said they think the reason sustainability resonates more with abstract thinkers is because it’s a more abstract concept in itself. “Consumers who construe information more abstractly are more likely to focus on the future, which makes the long-term benefits of purchasing eco-friendly products more salient in the present.”

Most consumers are more concrete thinkers when they’re making purchase decisions in general, according to White. “They are thinking of what specific products they need to buy in the here-and-now to meet their immediate concerns,” she said. One solution to this fixed approach, she discussed, is to get consumers thinking more abstractly — in a way that helps them consider the future.

A lack of clarity around the benefits of eco-friendly products and whether they will make a difference are reasons people may be uncertain about buying them. “There’s also the notion that choosing a sustainable option often means that you’re taking some kind of cost to the self — so people might think sustainable options cost more, or they’re less effective.”

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According to White, some brands have navigated the challenges associated with negative perceptions around sustainability very well. Tesla is one of them.

“They’ve [Tesla] done a really nice job of linking the product line to things like performance and innovation, so consumers can say, ‘I can have this great performing car, I can feel proud about its environmental benefits, and it has these other positive consequences as well.'”

In terms of sustainability in transportation during these times, if people are travelling less and getting deliveries at home more, there could be an offsetting effect with a positive impact if the “last mile” of that delivery process is done sustainably, White told strategy.

As the head of UBC Sauder’s Peter P. Dhillon Centre for Business Ethics and a member of the Decision Insights for Business & Society (DIBS) initiative, White is dedicated to helping researchers gain a better understanding of the decision-making process when choosing eco-friendly options, to ultimately help people make better choices.

Over the course of three years, her team will be utilizing decision science and behavioural insights to shed more light on this evolving area. Already, they have developed a framework for changing consumer behaviour to be more sustainable. This framework is represented by the acronym “SHIFT” and considers five factors: Social, Habits, Individual self, Feelings and Cognition, and Tangibility.

“One key predictor as to whether people will install solar panels is whether their neighbours do,” White said. “There are lots of examples where social influence can be powerful in changing behaviour.”

In terms of habit, the professor said, “Lots of our existing habits are not sustainable. If we want to encourage people to be more sustainable, it usually means overcoming an old habit.”

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A new generation of leaders in business, who see beyond profit margins, will be integral to helping shift the way companies operate and the impact they have on consumers and the wider community.

Faculty members at UBC Sauder, like White, are committed to nurturing these leaders. The business school creates an environment that’s optimal for developing students’ responsible leadership skills, teaching them to channel their beliefs into their approach to business.

Outside of what students learn in the classroom, there’s the fact that UBC Sauder is part of the wider UBC system, highly regarded for its research. In 2020, UBC was ranked as the #2 University for Research in Canada by Times Higher Education.

Research conducted at UBC uncovers the insights that help business leaders understand consumer behaviour, improve business practices, and transition to operating more sustainably. Upon graduating, UBC Sauder students are equipped to approach business in a way that’s reflective of their shared values: rigour, respect, and a sense of responsibility.

To discover how you could lay the foundation for your future as a business leader, visit sauder.ubc.ca.

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