Get Closer to Your Customers by Understanding How They Make Choices

by Itamar Simonson



The development of customer-driven strategies requires companies first to identify what their customers want. This approach is most effective when consumers know what they want and have stable preferences that can be used to predict their future purchase decisions. However, evidence from several recent studies suggests that consumers' wants are often fuzzy, unstable, and susceptible to influence by a variety of seemingly irrelevant factors. Specifically, the choices that consumers make can be systematically affected by manipulating the set of alternatives under consideration, the manner in which alternatives are evaluated, the description of alternatives, and other factors. Accordingly, being close to the customer must involve an understanding of how consumers' preferences are shaped and influenced, rather than merely revealing and serving existing preferences. This article concludes with a discussion of ways in which companies can use current knowledge about the psychology of customer choice in the development of product, positioning, pricing, communications, and selling strategies.

California Management Review

Berkeley-Haas's Premier Management Journal

Published at Berkeley Haas for more than sixty years, California Management Review seeks to share knowledge that challenges convention and shows a better way of doing business.

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