Extrinsic preference

We may buy something purely because we fancy it. On the other hand, much buying involves deliberation as we weigh up the pros and cons of buying product X as opposed to product Y. Such evaluation involves choice criteria embracing objective reasons to justify purchase. Where purchase involves deliberation on objective reasons, preference is said to be extrinsic. The (Extrinsic preferences) Figure categorizes these objective reasons as integrative, economic, adaptive, legalistic or technical (after Diesing, 1962).

Extrinsic preference involves true decision-making. In this sense of the word `decision', there can be no programmed decisions (only programmed choices) because decision involves uncertainty as to consequences of action and future likely preferences for these consequences. During evaluation, criteria are drawn on and weights assigned although, as Nozick (1981) points out, evaluation need not bestow exact quantities but simply make some criteria count more than others. The consumer in effect does a mental experiment to judge the consequence of this or that attribute being absent or present. Katona (1964) suggests that decisions making in this sense is more likely to occur when:

• purchases are major and fairly rare -for example, a house;
• there has been unsatisfactory past experience with such buying;
• the product is new;
• there is awareness of the need for conformity to reference group norms;
• certain personal characteristics (for example, education) are present.

Use-functions and generated-functions of offerings

Products are bought to perform functions, that is, to produce certain effects. These Use-functions are the objective uses to which the product is put. The primary use-function of a dishwasher is to clean dishes, while the use-function of toothpaste is to clean teeth. Generally, use-functions dominate our thinking about products. Many products are `type -identified' by reference to their use-function. Thus anything counts as a coffee maker if its use-function is to make coffee. Similarly, anything qualifies as a `seat' if its use-function is to be sat on. When we speak of some product being a `good' one, we usually refer to how well it fulfills its use-function. For instance, a good watch usually means an accurate timekeeper. Disputes as to use-function(s) give rise to ambiguity as to what constitutes a `good' product. The more accurately a manufacturer can establish a use-function for his product in a market or market segment, the more precisely performance requirements can be laid down.

The generated-function(s) of a product are the additional costs and benefits generated by using, consuming or possessing the product. Thus, while the user function of a car is to provide flexible, fast means of transportation, this would not be the sole basis for purchasing a Rolls Royce. Such a car is a costly status symbol and may be bought primarily because of this. Some brands are rejected even when they are the most efficient means for the application envisaged. Thus a sitting-room chair is judged not simply on its likely performance as a sturdy, comfortable seat but on how it fits with the other furnishings, how it will be perceived by others, whether it is fashionable (or too fashionable!), its price (too high, or too low), risks of obsolescence, and so on.

Many products possess the same use function but not the same generated function (for example, a mass produced dress versus a designer dress), and it may be the generated function(s) that are vital. The extent to which products perform the same use- functions is a measure of the extent to which the products are substitutes. But whether such substitute products are directly competitive depends on the extent to which they are perceived as similar in terms of both use- and generated- functions. Thus a Rolls Royce and a Volkswagen are closer as substitutes than they are as immediate rivals.

Use-functions are generally more visible than generated-functions; indeed, many generated functions are latent, that is, go unrecognized or unacknowledged. However, non-traditional use-functions may not be obvious and the discovery of new use functions can be the basis of opening up new markets. Thus it was not obvious that there was a market for books where the primary use-function was to fulfill a role as decorative furniture!

Choice criteria

What choice criteria are relevant to use-functions and what choice criteria are relevant to generated functions? Use functions cover technical and legalistic criteria, while generated-functions embrace integrative, economic and adaptive criteria.

Integrative criteria

Integrative criteria are related to cultural, social and ego, although in we have adopted the terms `convention', `bandwagon/ fashion' and `ego I status I integrity' as being more the language reflecting reasons for buying.

Convention can influence purchase so decisively that little deliberation takes place. This does not necessarily demonstrate that the consumer has low involvement with the product. On the contrary, the purchase can be so important (for example, a wedding dress) that the buyer adheres rigidly to the book. As Lewis ( 1 969) points out, convention is conforming from choice to what are regarded as the legitimate expectations of others (for instance, choosing clothes in conformity to the norms of those with whom we mix). Conventions are socially enforced in that failure to conform can evoke unfavorable reactions from others.

Conformative behavior is not restricted to conforming behavior. Thus, if someone is deliberately not conforming to social norms (for example, not using a wedding ring), her behavior may still be conformative to some other set of norms. That group influence can be decisive in buying is shown in studies by Bourne (1951), Venkatesan (1966), and Moschis (1976).

Bandwagon and fashion influence purchase behavior (e. g., Cabbage Patch dolls) that is highly social. The payoff in fashion lies in identifying with the `in' group in a manner that signals to the world that the person is unique or an `insider' and not simply an `outsider' looking on.

Ego and status considerations enter into many purchase decisions. A woman selects a fragrance to suit the image she wishes to project, while a mink coat is a major status symbol. Men are also responsive to the demands of their egos and the desire for status. If we look at the lifestyles of the aristocracy throughout the ages we are struck by the sacrifices in convenience and comfort in dress and so on in favor of ostentation and display. Perhaps in a country where most can afford good clothes, the most affluent must seek other ways to signal rank.

Personal integrity (or conscience) also enters in buying, when, for example, a woman rejects a fur coat as a gesture of disapproval of those who would kill animals for their skins.

Economic criteria.

Economic criteria, like price, cost per unit of effort or time expended, always enter purchase evaluations. Economic criteria are likely to dominate in buying standard products like nuts and bolts and natural products like eggs and milk. Even the wealthy consider price in relation to use functions or how long the products will be needed. The Duke of Westminster, reputedly one of the wealthiest men in Britain, was reported as switching to Marlboro cigarettes when Sullivan and Powell's cigarettes became `too expensive' (British Airways' High Life, June 1983). But price may not be other than a constraint when offerings are all similarly priced. Much promotional effort is directed at overcoming economic barriers by suggesting extra value (for example, `save money', `extra bonus', `free'). Methods of distribution reduce costs to the consumer. Thus a primary advantage of mail order is convenience, as is the convenience of having something locally obtainable.

Adaptive criteria

For many products, consumers have wells anchored opinions, but for purchases far removed from their experience there is uncertainty (and often anxiety) over the possibility of making a mistake (that is, not following the right rules). Adaptive criteria refer to the adaptations that occur in coming to terms with uncertainty over the consequences of buying one brand rather than another and the information overload in attempting to master facts about a product. A study by Jacoby, Spellar and Kohn ( 1 964) shows that information overload can be a significant factor in buying. Adaptive criteria are commonly employed when the product is new or novel, or where there is significant risk involved. The risks may be financial or associated with health, self image or social disapproval. Kahneman and Tversky (1982) suggest that the threat of loss has a much greater impact than the possibility of equivalent gain. However, while risks are taken to avoid losses and to reap gains, they are also undertaken for the sheer thrill of suspense.

Many consumers can be `sold' on a product (that is, convinced that the product has benefits for them) but hesistate to buy because of perceived risk. In Kurt Lewin's (1968) terms, `unfreezing' of the consumer has occurred but there is a need to get them `moving' by overcoming objections related to risk. Many of the frequently-used words appearing in advertising copy seek to lessen the perceived risk of buying (`natural', `guaranteed', `best', etc.).

There are a number of strategies followed by consumers in adapting to uncertainty:

• imitate those `in the know';
• seek advice;
• buy on reputation I the familiar;
• sample only;
• seek guarantees and reassurance;
• do comparison shopping.

Imitative behavior is one way of adapting to uncertainty. Buyers may simply copy others whom they believe are more expert than themselves. Thus I may buy the same shares as some top businessman if I think he or she knows something I do not know about the likely success of the company. This in informational conformity to what the consumer perceives as greater knowledge is contrasted with the normative conformity? associated with fashion and convention. As one small banker said in relation to loans to Poland, `Why should we hold back when Citibank and Barclays are getting in there? After all they're not idiots (Economist, 20 -26 March 1982). Sheth (l968) shows how foreign students in the US imitate their friends in brand selection. In imitative adaptation, there may be no extensive information search even though the consumer may be highly involved with the purchase.

Advice is another way of adapting to perceived risk in buying. The literature on word of mouth communication and opinion leadership is relevant to the question of the giving and receiving of advice. Advice need not necessarily be decisive, although, on occasions, we genuinely regard some source of advice as authoritative live (for example, medical advice), regardless of our own assessment of relative merit.

Our familiarity with a product and the reputation of a brand, whether formed on the basis of personal experience or otherwise, are important factors in assessing risk and reducing uncertainty. Consumers acknowledge buying well known brands to reduce risk (Roselius, 1911). The well known brand is usually first to be considered when a new product is being bought, while a publicized defect or failure suggests leaving alone. A buyer distinguishes among brands and brand image is often the only way. Thus 95 per cent of the 500 largest US industrial firms are audited by one of the `big eight' accounting firms. This is not the result of advertising by the accounting firms, although advertising is now allowed. This practice is consistent with a study by Newman and Staelin (1973), who demonstrate that there is more reliance on independent sources of information rather than on advertising when the purchase is risky.

Sampling(buying in small amounts) is a common way to minimize the risk of making errors in buying. Hence, manufacturers of a new product offer trial sizes to induce trial and accelerate adoption. Additionally they may offer guarantees and reassurances, such as see-through glass jars (Levitt, 1981).

None of the above strategies to adapt to risk and uncertainty entails extensive search, evaluation or learning. But this does not mean that extensive search does not occur on occasions. However, Katona and Mueller ( 1954) found that even in the case of buying large household goods there was little extensive search or close evaluation.

Legalistic criteria

For most products, the consumer will evaluate products or brands against some criteria to judge relative merit. But sometimes the buyer is not free to choose, and acts in accordance with the wishes or demands of others. We term this `legalistic' criteria, suggesting criteria imposed from outside. Thus doctors legislate medicines and government regulations demand I buy safety belts for my car or crash helmets if I use a motor cycle.

Technical performance criteria

Technical performance criteria embrace perceptions of the effectiveness and efficiency (for example, easy to handle, understand, operate etc.) of the product in the use function envisaged for it, The consumer may have problems in determining what technical performance factors are required for the application envisaged and hence may fall back on surrogate indicators (for example, price) as indicative of quality.

Are all technical performance factors for consumer goods associated with social goals as suggested by Douglas and Isherwood? Many attributes of performance are indeed instrumental (for example, fuel efficiency for economy) and much performance that is sought in excess of use requirements (for example, a large car engine) may be for social reasons. No doubt `building social bridges or erecting social fences' is of primary importance when buying at the product level, but at the brand level broader criteria seem to come into play.

The categories of extrinsic choice criteria discussed above are reflected in advertising appeals as shown in Table 4.1. Consumers are apt to draw on a combination of extrinsic preference factors. This is also true in industrial buying, although economic and technical factors usually predominate (see Lehmann and O'Shaughnessy, 1 982). The selection of a supplier rather than the selection of a product leads to a modification of our definitions of integrative and adaptive criteria. Extrinsic preference criteria as applied to choosing an industrial supplier are shown in Appendix 1 to this chapter.