Consumers’ decision-making style as a basis for segmentation Received (in revised form): 20th September, 2001

Dr Gianfranco Walsh is an Assistant Professor of at the University of Hanover’s Department of Marketing II, Germany. His research focuses on cross-cultural consumer research, e-commerce and movie marketing. Gianfranco’s work has been published in the Journal of Consumer Affairs, Academy of Marketing Science Review and several German journals. He also works closely with several organisations in the retailing and Internet sector as a consultant.

Thorsten Hennig-Thurau is an Assistant Professor in the Department of Marketing at the University of Hanover, Germany. His research interests include , services management and the management of higher education. Dr Hennig-Thurau’s work has been published in, among others, Psychology & Marketing, Journal of and Journal of Service Research.In addition to his academic activities, he is also an experienced marketing consultant and marketing researcher.

Vincent Wayne-Mitchell is Professor of Marketing, Manchester School of Management, UMIST. His research focuses on consumer decision making and complaining behaviour. He has done work for numerous private and public organisations including: Coca-Cola, Safeway, Tesco, Cooperative Bank, EU and DTI.

Klaus-Peter Wiedmann is Chair of the Department of Marketing II at Hanover University, Germany. His research focuses on strategic marketing, , and corporate reputation. Klaus-Peter Wiedmann is Country Director (Germany) of the Reputation Institute.

Abstract Decision-making styles are important to marketing because they determine , are relatively stable over time and thus are relevant for market segmentation. The need to test the generalisability of Sproles and Kendall’s1 consumer styles inventory (CSI) in different countries and an attempt to extend the original work led the authors to test the structure of decision-making styles of German shoppers and its use in segmenting consumers. From a sample of 455 German consumers, a seven-dimensional structure of decision-making styles was found using principal components analysis and confirmatory . identified six meaningful and distinct decision-making groups. These decision-making groups can be viewed as basic segments that can be used in conjunction with traditional market segmentation approaches. Implications for and practitioners are discussed.

2 Gianfranco Walsh Understanding buying-related consumer behaviour, eg personality, Department of Marketing II, decision-making behaviour of consumers attitude3 or lifestyle.4 One approach to University of Hanover, Koenigsworther Platz 1, is important for companies’ strategic categorising consumer behaviour is to 30167 Hannover, Germany. marketing activities and effective identify decision-making typologies. Such Tel: (ϩ49) 511 762 4540; communication with different consumer typologies aim to attribute certain Fax: (ϩ49) 511 762 3142; e-mail: segments is helped by understanding decision-making traits to consumers in 5 [email protected] psychological constructs which relate to order to classify them as economic,

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Table 1: Descriptions of consumer decision-making dimensions

Perfectionism: This trait is characterised by a consumer’s search for the highest or very best quality in products. Respondents scoring high on this dimension could be expected to be careful, systematic or comparison shoppers. consciousness: Consumers who are oriented towards buying the more expensive, well-known national , believing that a higher price means better quality. They also prefer best-selling, advertised brands. Novelty-fashion consciousness: This dimension characterises novelty seekers, who find seeking out new things pleasurable. Novelty seekers are likely to shop less carefully and more impulsively, and are less price sensitive. Recreational shopping consciousness: Consumers who view shopping as recreation and entertainment. These consumers find shopping a pleasant activity and shop just for the fun of it. Price- consciousness: Those scoring high on this dimension look for sale prices, appear conscious of lower prices in general, and are likely to be comparison shoppers. They are also concerned with getting the best value for their money. Impulsiveness, carelessness: The impulsiveness dimension measures an orientation that is characterised by careless and impulsive shopping. Those scoring high on this dimension do not plan their shopping and appear unconcerned about how much they spend. Confused by overchoice: This trait characterises consumers who are confused about the quality of different brands and by the information available. High scorers on this characteristic have difficulties making choices. Brand-loyal, habitual: Consumers who have favourite brands and stores and have formed habits in choosing these repetitively.

apathetic,6 quality conscious,7 choosy,8 understanding of consumer information seeking,9 price conscious,10 decision-making characteristics. In this variety seeking11 or brand loyal.12 context, the work by Sproles and Despite its intuitive appeal, the latter Kendall,14 who developed a consumer approach can be criticised because it is styles inventory (CSI) is of particular doubtful that consumers can be grouped interest. In their integrative approach, into distinct unidimensional behaviour Sproles and Kendall assume that typologies. Labelling a consumer always consumer decision-making behaviour can as either ‘economic’ or ‘price conscious’ be explained by eight central is unrealistically simplistic and does not decision-making dimensions that reflect the growing research into the influence a consumer’s decision-making so-called ‘hybrid consumer’.13 Consumers behaviour through an individual are rarely exclusively fashion or price combination of all eight dimensions. An conscious, but tend to make buying important assumption of this approach is decisions related to a specific buying that individual decision-making situation. Therefore, for most consumers, dimensions vary from consumer to several decision-making dimensions consumer and each consumer has a prevail. In addition, existing specific decision-making style.15 Although characterisations are based on separate initially developed for US consumers, theoretical concepts and consequently replications have been conducted in only capture certain aspects of consumer several countries, but have lacked wider decision-making behaviour. This means generalisability because they have mainly the existing decision-making typologies used student samples. Furthermore, little are often unrelated and their practical research on the CSI has made the relevance is limited. obvious extension to use the styles as a More recent approaches attempt to basis for market segmentation.16 address and avoid these weaknesses by The objective of this study was to postulating a multidimensional examine the usefulness of the CSI for

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market segmentation using a non-student proclivity to impulsive buying is also sample to improve the generalisability of likely to experience overload-confusion. the results. Accordingly, Sproles and Despite the eight-dimensional structure Kendall’s CSI is discussed in the context being confirmed in the original study,20 of existing approaches to market there are indications that the eight-factor segmentation; its reliability and validity model does not represent an ideal in Germany is tested with a sample of solution because some dimensions 455 consumers and an attempt is made showed a poor reliability (eg price-value to identify the existence of German consciousness and impulsiveness).21 consumer decision-making segments Since marketing theories and concepts using cluster and multiple discriminant empirically tested in America may not be analysis. universally applicable, an uncritical application to other countries can lead to validity problems and to results of CONCEPTUAL BASIS: questionable worth to marketing. Hence, DECISION-MAKING STYLE AND it is necessary to validate concepts and MARKET SEGMENTATION instruments in each country. Indeed, Sproles and Kendall22 requested that ‘to The concept of decision-making styles establish generality further, [the CSI] A consumer’s decision-making style is must be administered to other defined as ‘a mental orientation populations’. Several authors have characterizing a consumer’s approach to responded and replications have been making choices’,17 which, according to carried out in South Korea,23 New Sproles and Kendall, is relatively stable Zealand,24 Greece, the USA, India and and has a lasting effect on consumer New Zealand,25 Great Britain26 and decision making. The theoretical China.27,28 The original structure of assumption behind the concept is that decision-making style, by and large, was consumers have eight different confirmed in all seven countries. Some decision-making dimensions that country-specific structures of determine their decision making. These decision-making styles emerged, eight dimensions originally identified in a however, eg in South Korea29 the literature review carried out by Sproles dimension novelty-fashion consciousness and Kendall (see Table 1)1 are measured could not be confirmed, but a new in a questionnaire comprising 40 items dimension time-energy conserving was rated on a five-point scale labelled found.30 Lysonski et al.31 furnished the ‘strongly agree’ (5) and ‘strongly disagree’ most convincing evidence for (1). The postulated eight-dimensional country-specific differences (including model was subjected to a principal translation-related difficulties in Greece component analysis and support for the and India) with their four-country study. anticipated dimensions found.19 The Fan and Xiao tested a modified decision-making style concept implies a seven-factor model, which they did not simultaneous relevance of several consider an ideal representation of decision-making dimensions. The ability Chinese decision-making styles and to determine individual consumer because of the weak reliability of two decision-making styles can be seen as a dimensions, declared themselves in favour key characteristic of the concept. For of a five-factor model.32 example, it is possible to determine Further issues of generalisability to the whether a consumer who shows a general population exist with the CSI as

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the original study used US high-school segmentation is the so-called ‘benefit students to establish the reliability and segmentation’,33 which, in combination validity of the instrument. Finally, with conjoint analysis, tends to be very limitations exist with regard to the initial realistic and measurable; however, it is processing of the conceptualisation, in also not free of limitations. Behavioural which only Cronbach’salphaand segmentation is based on observable exploratory factor analysis were used. consumer behaviour; for example, media More powerful methods such as usage, store or brand choice. The confirmatory factor analysis were not strategic merit of the latter segmentation used. approach is limited because only past consumer behaviour is captured. The meaningfulness of such criteria, however, Decision-making styles as a tool for increases with the growing power of market segmentation databases that are used in Usually, two related aspects are described relationship marketing34 to group within the notion market segmentation. consumers into segments with varying The first aspect describes the process of attractiveness, depending on their dividing a heterogeneous mass market respective customer value. into smaller, relatively homogeneous Overall, all available segmentation segments, which will respond differently criteria have weaknesses and an ideal way to elements, with the aim of market segmentation is not achievable. of selecting one or more segments on Additional criteria will probably not lead which to focus. This involves to better market segmentation, but one determining the price, , way to increase the quality of market product and communications decisions segmentation could be to develop a for each segment (eg service, content of multistage segmentation approach. Using advertisement). this approach, a consumer’s From a methodological perspective, decision-making style can be viewed as a effective market segmentation requires preliminary or succeeding segmentation meaningful bases or variables with which criterion that is used before/after a more the total market can be divided. differentiated segmentation through Consumer markets are typically divided demographic, psychographic or by demographic, psychographic or behavioural criteria is conducted.35 buying-related (ie behavioural) variables, Although decision-making styles groups which are used individually or in could be of practical relevance per se,it conjunction. A demographic is argued that they can be useful when segmentation can be conducted relatively used together with conventional easily because the necessary data tend to segmentation criteria. By combining be available. It is, however, unsuitable for consumer decision-making style segments capturing differences in consumer with traditional segmentation approaches, preferences. Psychographic segmentation it is likely that the meaningfulness of the on the other hand is able to identify latter can be increased with regard to product preferences, but it cannot be marketing decisions. easily related/assigned to marketing Suppose a beer manufacturer develops variables. For example, consumers with a a new beer brand and is planning to certain lifestyle may not be reachable introduce it using ‘only’ psychographic through conventional media. A more segmentation, from which several lifestyle effective line of psychographic groupsemerge.Letusalsosupposethis

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manufacturer decides to target the perfectionistic, brand conscious and loyal lifestyle segment which shows the consumers, for example, will go for greatest fondness for the new brand. solidly fabricated, branded, high-tier Marketers can usually relate shops to a products. certain lifestyle (group) and knowing So far, decision-making styles allow where this group shops and spends its segmentation into different (basic) leisure time would certainly help in segments which can precede (or follow) accurately targeting them. Such a other segmentation approaches. Brand psychographic approach, however, is manufacturers will have to evaluate the perhaps not the most effective way to appropriateness of the different target consumers. Precise promotional decision-making segments, that will be activities would require a deeper identified in this study, with regard to understanding of consumer preferences at their own products. In conjunction decision level. If this lifestyle group with other numbers (eg customer would be further segmented into turnover) basic segments can be decision-making groups and, for example, selected that can then be analysed in an ‘impulsive’ and ‘quality depth using traditional segmentation conscious/perfectionistic’ group emerged, approaches. On an elemental/basic then marketers could carry out their level, strategic decisions can be targeting effort more precisely. For supported. For instance, if a ‘brand example, for the ‘impulsive’ group special loyal, perfectionistic’ segment is displays and special merchandising identified, a manufacturer of mobile techniques (in stores this lifestyle group is phones can opt for a distribution known to visit) could be used that through specialist shops. On this basis, stimulate impulse purchases (eg in-store it would seem appropriate for the promotions, provisional/temporary manufacturer to then use traditional product shelving next to the checkouts) segmentation criteria as quasi and the ‘quality conscious/perfectionistic’ second-order criteria (eg ’ group could be targeted with preferences or benefits). The advertisements stressing the quality of the manufacturer of mobile phones could, beer and its ingredients (eg Bavarian for example, create subsegments based hops). on the different preferences consumers Sproles and Kendall argue that have as to a mobile phone (eg size, decision-making styles are stable over long standby, small display). By doing time, which for the above-mentioned so, it becomes possible to get a more criteria does only apply to a limited refined picture of customer preferences extent. A consumer’s lifestyle, for and a better understanding of which example, changes more rapidly.36 subsegments exist. The approach Decision-making styles can be interpreted described (see Figure 1) is also likely as basic buying-decision-making attitudes to enhance the development of that consumers adhere to, even when products that fit the varying preferences they are applied to different goods, of customers better than it would be services or purchasing situations (eg without consumer decision-making style perfectionism or a brand-switching segments. A manufacturer of mobile tendency). Further, it is likely that phones, however, who knows that his certain basic needs and product (prospective) customers prefer a small preferences are associated with display can still fail if the customers decision-making styles. A segment of comprise a ‘price conscious’ and

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CDMS-based Segment B CDMS-based (e.g., brand Segment A loyal/ Attribute 1 perfectionistic) Preference- Preference- based based Sub-segment Sub-segment 1 2 Attribute 2 CDMS-based CDMS-based Preference- Preference- Segment C Segment D based based Sub-segment Sub-segment 3 4

Note: CDMS = Consumer Decision-MakingDecision-Makin Style

Figure 1 Number of clusters and increase in heterogeneity

‘impulsive’ segment and if these METHODOLOGY segments are unwilling to pay the for the small display. The questionnaire Thus far, only two studies exist that A German version of Sproles and maintain that it is possible to discriminate Kendall’s 40-item CSI was developed. between consumers on the basis of their During translation due attention was paid decision-making style. One is an to the issue of equivalence of meaning American study that revolves around the and in order to achieve comparability, loyalty of catalogue item buyers, using a back translation was conducted. A few women-only sample.37 The other was items caused problems and were carried out in the UK and used a student rephrased without altering their sample.38 Mitchell and Bates39 conclude meaning.40 The questionnaire was face that marketers could develop marketing validated using exploratory interviews strategies that appeal to decision-making which revealed that some respondents style segments. As outlined earlier, were reluctant to answer certain items.41 however, the authors would argue that The final German questionnaire included their understanding of the usefulness of 38 of the 40 Sproles and Kendall items decision-making style segments is a which were rated on a five-point agree– different one. More specifically, they disagree scale (see Appendix 1 for items). doubt that marketers can effectively use decision-making segments at store and product level without considering The sample another segmentation criterion. A sample of male and female shoppers (18 The objectives of this study were to and older)42 was drawn from those test the CSI’s reliability and validity in entering or leaving a shop in Lueneburg Germany, examine the appropriateness of and Hamburg during July and August the CSI for market segmentation and to 1998. The interviews were carried out produce consumer decision-making from Monday to Saturday at two different segments. locations: one in front of a department

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Table 2: A comparison of the demographic profileofthesampleandtheGermanpopulation

Sample demographic profile Germany demographic profile % %

Age 18–31 34 20 32–44 31 18 45–57 15 17 58ϩ 20 23 Gender Male 44 49 Female 56 51 Education* More educated 46 25 Less educated 54 75

*Subjects with ‘only’ a basic education (ie who completed lower or intermediate secondary school) formed the group of ‘less-educated’ consumers, while those with a higher education (ie A-levels [German ‘Abitur’]and/or university degree) formed the group of ‘more educated’ consumers. Respondents with Abitur were considered more educated as they have spent 13 years at school (as opposed to people who went to lower or intermediate secondary school and have only done nine and ten years respectively)

store in the centre of Hamburg and the rotation was performed. To identify the other on the premises of a supermarket in ‘right’ number of factors or Lueneburg (within a seven-day and decision-making styles dimensions, several 17-day period respectively). Interviewers alternative solutions were compared. intercepted consumers leaving the Looking at the amount of explained department store or supermarket, which variance, the eight, seven, six, and were typical in size and location of most five-factor solutions were seen as most other German cities. expressive. Solutions with a smaller Table 2 provides a description of the number of factors explained an sample characteristics compared to the insufficient amount of variance of the general population. data set, while solutions with more than eight factors could only marginally increase the explained variance. With the Data analysis exceptionofthefive-factor solution, the First, the authors examined the original degree of explained variance was higher eight-factor structure to see if it could be in all cases than the 46 per cent confirmed for German consumers. For mentioned by Sproles and Kendall. Table testing purposes, confirmatory factor 3 lists the relevant information for all analysis (CFA) was instrumentalised, four alternative solutions. If justifiable assigning the items according to the from looking at the loading structures, factor-loadings structure as described by factors are named according to the titles Sproles and Kendall. The maximum used in the original study. likelihood algorithm of LISREL, version Following this, CFA were calculated 8.12 was used for the calculation. Model for each of the four alternative solutions. identification, which is an indispensable Model identification was achieved for the condition for the interpretation of CFA eight, seven, and five-factor solutions, results, was not reached, neither when but not for the six-factor model. On the considering all items from the original basis of a comparison of goodness-of-fit study nor a selection of three items per measures, the authors arrived at the factor. Consequently, the appropriateness conclusion that the seven-factor model of the original eight-factor structure was best represented the data. The global fit questioned. To identify a more was similar for all remaining models, appropriate structure, a principal while the local fit criteria indicate the components analysis with Varimax seven-factor model to be clearly superior

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Table 3: Results of principal components analyses for four alternative solutions

8-factor 7-factor 6-factor 5-factor model model model model

Explained variance 55.1% 51.9% 47.7% 43.1% Eigenvalue of last extracted factor 1.28 1.58 1.74 2.01

Cronbach’salpha Perfectionism 0.77 0.75 0.75 0.69 Brand consciousness 0.48 0.73 0.78 0.82 Novelty-fashion consciousness 0.71 0.71 0.69 0.65 Recreational/hedonism 0.42 0.65 — — Price-value consciousness — — — — Impulsiveness 0.61 0.70 0.71 0.70 Confused by overchoice 0.76 0.75 0.76 0.76 Habitual/brand-loyal — — — — Factor A 0.31 — — — Factor B 0.46 0.53 0.53 —

to the alternative models (see Appendix method, and hierarchical (or linkage) 2). Here, only three of a total of 21 clustering is the most popular way of indicators have coefficients of distinguishing distinctive customer determination smaller than 0.5, and the segments. In this study, cluster variables average variance explained is higher than were used which served as indicators in 0.5 for six out of seven factors. the seven-factor solution of confirmatory In the German sample, more than a factor analysis (see Appendix 1). To dozen out of 38 items loaded on factors avoid conceivable error, which might other than those found for the US result from an unequal number of items sample. The seven dimensions are per factor, the items of each factor were labelledinlinewiththoseofSprolesand aggregated (ie decision-making style Kendall, when they reflect similar dimensions) and the respective mean decision-making styles of German values used as input variables for consumers and relate to: brand clustering. Distances between the clusters consciousness (dimension 1), were calculated with the Euclidean perfectionism (dimension 2), distance measure, and aggregation of recreational/hedonism (dimension 3), clusters was performed with Ward’s confused by overchoice (dimension 4), procedure. The latter is a commonly impulsiveness (dimension 5), used algorithm which is known for its novelty-fashion consciousness (dimension ability to produce valid solutions under 6). The seven-factor model of conditions which are fulfilled in this decision-making style formed the starting study. As with exploratory factor analysis, point of an identification of distinct cluster analysis does not deliver a ‘true’ German consumer decision-making solution, but leaves the decision about segments. the appropriate number of clusters largely up to the researcher. To reflect the true structure of the data set, the elbow Identifying German decision-making criterion was used to decide on the style segments number of clusters. Figure 2 shows a plot To identify decision-making style with the number of clusters on the segments of consumers, a hierarchical x-axis and the increase in heterogeneity cluster analysis was performed. Cluster (the percentage) on the y-axis. analysis is a well-established research As Figure 2 illustrates, thresholds exists

124 Journal of Targeting, Measurement and Analysis for Marketing Vol. 10, 2, 117–131 ᭧ Henry Stewart Publications 0967-3237 (2001) Consumers’ decision-making style as a basis for market segmentation Increase in Heterogeneity

Number of Clusters

Figure 2 Number of clusters and increase in heterogeneity

at nine, six and three clusters, oriented. Only the dimension respectively, indicating that the ‘true’ ‘perfectionism’ has a high average mean, number of clusters is nine, six or three. while all the other dimensions have a To be able to decide on the low mean, particularly ‘impulsiveness’. appropriatenessofeachofthethree Interestingly, ‘perfectionism’ was strong alternative solutions, an additional in all six segments, indicating that multiple discriminant analysis was Germans revere, demand (and deliver) performed for each of the three high-quality products and that they are solutions. The hit rate (or proportion of prepared to make an effort to find the customers correctly classified)ishighest ‘right’ product. for the six-cluster solution according to The demanding comparison shoppers the confusion matrices, with 90.5 per in Segment 2 are the largest group, cent classifiedintheappropriatecluster, comprising 30 per cent of the sample. while the hit rates are slightly lower for These consumers have high demands the nine-cluster solution (89.7 per cent) with regard to the products they and the three-cluster solution (85.7 per purchase and enjoy searching for and cent). Consequently, the six-cluster choosing products. Their tendency to solution is seen to be the most adequate switch brands on a regular basis is neither representation of existing German the result of an emotional feeling nor consumer decision-style segments. Figure cognitive confusion, but rather a 3 lists the mean values of the seven conscious element of their shopping consumer decision-making dimensions (ie experience. means of the respective aggregated Segment 3 represents very impulsive cluster variables) for all six identified consumers who tend to be rather segments as well as the respective indifferent with regard to brand and segment size. These results are now shopping experiences. described briefly. The buying decisions of consumers in Segment 4 are strongly emotionally dominated. These consumers, however, RESULTS are ‘hedonistic’ and are likely to perceive Segment 1 represents consumers whose ‘confusion by overchoice’. buying behaviour is factual and value The fifth and smallest segment was

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5 5 5 Segment 1 (=16,5%) Segment 2 (=28,6%) Segment 3 (=13,2%) FactualSegment and Value 1 (=16.5%) Oriented Demanding Segment Comparison 2 (=28.6%) Shoppers SegmentVery Impulsive 3 (=13.2%) 4 4 4

3 3 3

2 2 2

1 1 1 ABCDEFG ABCDEFG ABCDEFG 5 5 5 Segment 5 (=5,7%) Segment 4 (=17,4%) Segment 5 (=5.7%) Segment 6 (=18,7%) EmotionallySegment 4 Dominated (=17.4%) Brand Oriented & Shopping Enthusiastic Fashion SegmentConscious 6 Results-Oriented (=18.7%) 4 4 4

3 3 3

2 2 2

1 1 1 ABCDEFG ABCDEFG ABCDEFG A=Brand Consciousness; B=Perfectionism; C=Recreational/Hedonism; D=Confused by Overchoice; E=Impulsiveness; F=Novelty-Fashion Consciousness; G=VarietyG=Variet Seeking

Figure 3 Mean values of cluster variables for the six decision-making styles segments

somewhat difficult to characterise IMPLICATIONS because, with the exemption of one Themaingoalofthisstudywasto style, it has no outstanding or dominant complement existing segmentation style. Segment 5 represents approaches by adding another brand-oriented and shopping enthusiastic segmentation criteria, namely a consumers. They have a keen interest in consumer’s decision-making style. new products which causes them to alter Marketers could design products their buying decisions, but they also and/or communication strategies show a proclivity to specifically to target these segments. overchoice-confusion. Advertisements targeting consumers from Fashion conscious result-oriented the factual and value-oriented segment, consumers in Segment 6 are less for example, could focus on a product’s interested in the buying process itself key quality aspects rather than trying to than in the (branded) products they convey an image or emotions. purchase. Demanding comparison shoppers are These six segments have implications likely to respond positively to stores for marketing research and management offering a great assortment of branded and these will now be discussed. high-quality products. When targeting Moreover, a new dimension was the very impulsive segment of found that was labelled ‘variety seeking’, consumers, marketers could try to take which has not previously been identified advantage of their proclivity to purchase using the CSI. High scorers on this on impulse which can make it easier to dimension are likely to switch brands, persuade them to buy more than strictly even if their current brands satisfy their necessary.43 These consumers could be needs. They may also switch brands to targeted with in-store buying incentives experience better alternatives or to (eg offering additional merchandise with increase stimulation by bringing the initial purchase) or attractively something new into their lives. displayed eye-catching merchandise

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whichisknowntofacilitateimpulsive general component could be used when buying. There are also ways to capitalise targeting similar segments in different on impulsive shoppers, even without a countries or when developing store visit taking place because impulsive standardised products. buying can be instigated by television advertisements with phone numbers, online offers, etc. Emotionally dominated CONCLUSION AND FUTURE consumers like shopping and perhaps RESEARCH even view it as a way of self-realisation. The proposition of Sproles and These consumers are likely to go to Kendall’s44 eight-factor model was shopping malls that cater for their examined using a sample of 455 German fondness to browse different stores and consumers and performing exploratory as where they can find recreation facilities well as confirmatory factor analyses; a such as restaurants, cinemas, health clubs seven-dimensional structure was found to or hairdressers. Consumers from this be the most appropriate representation of segment also have the opportunity to a German decision-making style. The meet other people in a shopping mall. dimensions are: brand consciousness, Brand-oriented and shopping perfectionism, recreational/hedonism, enthusiasts enjoy shopping, are eager to confused by overchoice, impulsiveness, buy new products and brands, but tend and novelty-fashion consciousness, and to become confused from overchoice. the previously unknown dimension, These consumers are also likely to variety seeking. The validated seven respond positively to up-market shopping dimensions were then used to create six malls. Such stores should not, however, distinct decision-making segments. The offer too many (similar) products which authors conclude that consumer can overload these consumers. decision-making styles can be used as the Fashion conscious results-oriented basis of segmenting consumers and it is shoppers like new and fashionable likely that both specific needs and products, but prefer a ‘no-frills’ approach product and service preferences are to shopping. Factory outlet centres that associated with those segments. The offer branded products at reduced prices authors believe that a segmentation based could cater for their needs because the on decision-making styles could be even shopping environment in such centres more appealing when used together with plays only a secondary role (eg other segmentation criteria, eg merchandise sold out of cardboard boxes demographic or psychographic and not arranged on fancy shelves). segmentation. The results of such a Finally, when looking at the results of multistage segmentation approach would this study and that of previous be more precise, meaningful and replications of the CSI it becomes consequently, of greater practical apparent that certain dimensions (eg relevance. brand consciousness) emerge across The fact that the decision-making countries while other dimensions (eg dimensions identified in a country price-value consciousness) do not. This is subsequently determine decision-making indicative of the fact that the CSI has style segments, suggests that further two components: one general to all qualitative research is needed to ensure cultures and the other specifictoa that all dimensions relevant to German specific culture. The implication of this consumers are considered in a German for international marketing is that the CSI. As noted, not all of the original

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dimensions could be confirmed in every Kassarjian, H. H. and Robertson, T. S. (eds) 4th ed., Prentice Hall, Englewood Cliffs, NJ, pp. 317–339. country examined, which indicates that 4 Anderson, W. T. and Golden, L. L. (1984) ‘Lifestyle the current CSI seems unable to measure and : A critical review and consumer decision-making characteristics recommendation’,in‘Advances in consumer effectively in all countries. Therefore, research’,Kinnear,T.C.(ed.),Vol.11,Association for Consumer Research, Provo, UT, pp. 405–411. future German research should consider 5 Stone, G. P. (1954) ‘City shoppers and urban the possibility of adding additional identification: Observations on the social psychology dimensions known to be relevant to of city life’, American Journal of Sociology,Vol.60,pp. 36–45, July. German consumers, which could lead to 6 Darden, W. R. and Reynolds, F. D. (1971) new decision-making style segments. ‘Shopping orientation and product usage rates’, Such dimensions could relate to the Journal of Marketing Research,Vol.8,pp.505–508, November. constructs of environmental 7 Darden, W. R. and Ashton, D. (1974/75) consciousness, prestige-orientation or ‘Psychographic profiles of patronage preference altruism that tends to lead to ethical groups’, Journal of Retailing,Vol.50,No.4,pp. buying decisions, dimensions which are 99–112. 8 Ibid. knowntoexistinGermany. 9 Thorelli, H. B., Becker, H. and Engledow, J. (1975) Although decision-making dimensions ‘The information seekers: An international study of were able to identify different segments, consumer information and image’, Ballinger, Cambridge. little consideration has yet been given to 10 Lichtenstein, D. R., Ridgway, N. M. and whether these segments are substantial, Netemeyer, R. G. (1993) ‘Price perceptions and accessible, actionable, exhaustive, consumer shopping behavior: A field study’, Journal of Marketing Research, Vol. 30, pp. 234–245, May. exclusive, responsive and stable, and 11 Menon, S. and Kahn, B. E. (1995) ‘The impact of therefore can be effectively used by context on variety seeking in product choices’, marketers. In addition, further research is Journal of Consumer Research, Vol. 22, pp. 285–295, required to determine to what extent December. 12 Jacoby, J. and Chestnut, R. W. (1978) ‘Brand purchase behaviour differs at the product loyalty: Measurement and management’,Wiley,New level, which would give more York, NY. information on exactly what the 13 Schmalen, H. (1994) ‘Das hybride Kaufverhalten und seine Konsequenzen für den Handel’ [Hybrid identified segments look for in products Consumer Behavior and Its Consequences for to satisfy their differing needs. Retailing], Zeitschrift für Betriebswirtschaft,Vol.64, No. 10, pp. 1221–1240. Acknowledgement 14 Sproles and Kendall (1986) op. cit. 15 Ibid. This paper is based on one which received the Best 16 McDonald, W. J. (1993) ‘The roles of demographics, Paper Award in the SIG Track at the purchase histories and shopper decision making styles 2001 AMA Marketing Educators’ Conference, in predicting consumer catalog loyalty’, Journal of Washington DC. The authors thank the participants of ,Vol.7,No.3,pp.55–65. Mitchell, the Global Marketing SIG Track for their comments V.-W. and Bates, L. (1998) ‘UK consumer and suggestions. The authors also greatly appreciate the decision-making styles’, Journal of Marketing comments and critiques of two anonymous reviewers of Management,Vol.14,Nos1–3, pp. 199–225. this journal. 17 Sproles and Kendall (1986, p. 268) 18 Sproles and Kendall (1986, p. 270) do not rule out References: the existence of other dimensions: ‘We acknowledge 1 Sproles, G. B. and Kendall, E. (1986) ‘A that other characteristics might be equally valuable methodology for profiling consumers’ for specific applications, but the characteristics decision-making styles’, Journal of Consumer Affairs, chosen are among the most frequently discussed in Vol. 20, No. 2, pp. 267–279. consumer literature.’ 2 Lastovicka, J. L. and Joachimsthaler, E. A. (1988) 19 Sproles and Kendall (1986) op. cit. ‘Improving the detection of personality-behavior 20 Ibid. relationships in consumer research’, Journal of 21 These two dimensions had a Cronbach alpha less Consumer Research, Vol. 14, pp. 583–587, March. than 0.50 and the dimensions confused by 3 Lutz, R. J. (1991) ‘The role of attitude theory in overchoice and habitual/brand-loyal alphas of below marketing’,in‘Perspectives in consumer behavior’, 0.60, indicating that they were not very reliable.

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Reliability is the random error component of a segmentation can be used as a preliminary or measurement instrument. A measurement is reliable segmentation approach. For example, if a retailer if it reflects mostly true score, relative to the error. decided to go into e-commerce and wanted to Cronbach alpha is a measure of squared correlation know which products are most suitable for an between observed scores and true scores (ie online shop, a demographic segmentation could be reliability is measured in terms of the ratio of true conducted first (eg by gender and income), followed score variance to observed score variance). by one using decision-making styles (which are 22 Sproles and Kendall (1986, p. 277) op. cit. associated with product preferences). A mainly 23 Hafstrom, J. L., Chae, J. S. and Chung, Y. S. (1992) female clientele would clearly allow the retailer to ‘Consumer decision-making styles: Comparison narrow down the potential assortment size, but also between United States and Korean young knowing that a sizeable number of customers are consumers’, Journal of Consumer Affairs,Vol.26,No. ‘novelty-fashion seeking’ would make it even easier 1, pp. 146–158. to find the optimal online assortment. The retailers 24 Durvasula, S., Lysonski, S. and Andrews, J. C. couldalsoopttousebothsegmentationapproaches (1993) ‘Cross-cultural generalizability of a scale for in reverse order. profiling consumers’ decision-making styles’, Journal 36 Engel, J. F., Blackwell, R. D. and Miniard, P. W. of Consumer Affairs,Vol.27,No.1,pp.55–65. (1995) ‘Consumer behavior’, 8th edition, The 25 Lysonski, S., Durvasula, S. and Zotos, Y. (1996) Dryden Press, Fort Worth. ‘Consumer decision-making styles: A multi-country 37 McDonald (1993) op. cit. investigation’, European Journal of Marketing,Vol.30 38 Mitchell and Bates (1998) op. cit. No. 12, pp. 10–21. 39 Ibid. 26 Mitchell and Bates (1998) op. cit.Ref.16. 40 For example, the word ‘confused’ in the German 27 Fan, J. X. and Xiao, J. J. (1998) ‘Consumer questionnaire was replaced by ‘durcheinander’ decision-making styles of young-adult Chinese’, (mixed up), which is a more neutral word because Journal of Consumer Affairs,Vol.32,No.2,pp. ‘confusion’ (German: ‘Konfusion’, ‘Verwirrtheit’)has 275–293. unfavourable connotations in Germany. 28 Replications are widely considered an integral part 41 For example, problems emerged as to item 13 (‘I of scientific work. On the necessity of replications prefer buying the best selling brands’). Respondents see the special issue of the Journal of felt unable to know which brands sell best because Research,Vol.48,No.1. only in very few product categories (eg CDs, 29 Hafstrom et al. (1992) op. cit. videos) do consumers know which products sell best 30 Through inclusion of some items by Sproles (1985) through chart ratings. the South Korean questionnaire consisted of 44 42 In Germany, at the age of 18 people gain full legal items instead of 40. status, which entitles them to buy any (legal) 31 Lysonski et al. (1996) op. cit. product they desire. 32 Fan and Xiao (1998) op. cit. 43 Rook, D. W. (1987) ‘The buying impulse’, Journal of 33 Frank, R. E., Massy, W. F. and Wind, Y. (1972) Consumer Research, Vol. 14, pp. 189–199. ‘Market segmentation’, Prentice-Hall, Englewood 44 Sproles and Kendall (1986) op. cit. Cliffs, NJ. 45 CFA was performed for each factor separately. Items 34 Hennig-Thurau, T. and Hansen, U. (eds) (2000) that lead to a factor’s deterioration were excluded ‘Relationship marketing: Gaining competitive from the analysis and labelled (n.c.; not considered) advantage through customer satisfaction and in the table. In the simultaneous analysis those items customer retention’, Springer, Berlin. were excluded that had a coefficient of 35 It is likely that in many cases decision-making determination (COD) below 0.4.

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Appendix 1: Items and goodness-of-fit measures of principal components and confirmatory factor analysis

Factor Coefficients of loadings determination Items (of PCA) (of CFA) Means

Factor 1: Brand consciousness 5.44 0.71 (Average (Eigenvalue) variance explained) The more expensive brands are usually 0.71 0.79 2.26 my choice The well-known national brands are 0.70 0.65 2.44 best for me The higher the price of the product, the 0.69 0.69 2.20 better the quality I look carefully to find the best value for Ϫ0.50 n.c. 1.95 the money Nice department and speciality stores 0.45 n.c. 2.98 offer me the best products The most advertised brands are usually 0.43 n.c. 2.52 very good choices A product doesn’t have to be perfect, or Ϫ0.41 n.c. 2.83 the best, to satisfy me Factor 2: Perfectionism 3.48 0.53 In general, I usually try to buy the best 0.78 0.67 4.04 overall quality When it comes to purchasing products, I 0.77 0.58 3.67 try to get the best, or perfect choice Getting good quality is very important to 0.67 0.47 4.28 me My standards and expectations for 0.60 0.41 3.74 products I buy are very high I make special effort to choose the very 0.56 n.c. 2.2 best quality products Factor 3: Recreational/hedonism 3.11 0.66 Shopping is not a pleasant activity to Ϫ0.70 0.47 3.32 me Going shopping is one of the enjoyable 0.67 0.85 2.78 activities of my life I make my shopping trips fast Ϫ0.55 n.c. 2.57 Shopping in many stores wastes my Ϫ0.51 n.c. 3.51 time It’s fun to buy something new and 0.47 n.c. 3.31 exciting I shop quickly, buying the first product Ϫ0.44 n.c. 3.37 or brand I find that seems good enough I really don’t give my purchases much Ϫ0.44 n.c. 3.60 thought or care To get variety, I shop in different stores 0.42 n.c. 3.58 and choose different brands Factor 4: Confused by overchoice 2.34 0.57 The more I learn about products, the 0.74 0.70 2.86 harder it seems to choose the best All the information I get on different 0.71 0.59 2.33 products confuses me Sometimes it’s hard to choose which 0.71 0.43 2.65 stores to shop There are so many brands th choose 0.59 0.32 2.62 from that I often feel confused Factor 5: Impulsiveness 2.01 0.52 Often I make careless purchases I later 0.72 0.67 2.33 wish I had not I am impulsive when purchasing 0.71 0.38 2.77 I should plan my shopping more carefully 0.67 0.50 2.64 than I do I carefully watch how much I spend Ϫ0.60 n.c. 2.46 I take the time to shop carefully for the Ϫ0.53 n.c. 2.77 best buys

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Appendix 1: continued

Factor Coefficients of loadings determination Items (of PCA) (of CFA) Means

Factor 6: Novelty-fashion 1.74 0.58 consciousness I keep my wardrobe up-to-date with the 0.84 0.77 2.61 changing fashions Fashionable, attractive styling is very 0.69 0.36 3.32 important to me I usually have one or more outfits of the 0.68 0.61 2.47 very newest style I enjoy shopping just for the fun of it 0.40 n.c. 2.29 Factor 7: Variety seeking 1.58 0.48 I change brands I buy regularly 0.70 n.c. 2.59 Once I find a product or brand I like, I Ϫ0.54 n.c. 3.31 stick with it It’s fun to buy something new and 0.49 0.53 3.69 exciting To get variety, I shop in different stores 0.45 0.43 3.58 and choose different brands Nice department and speciality stores Ϫ0.44 n.c. 2.98 offer me the best products

n.c. ϭ not considered in the analysis45

Appendix 2: Global and local goodness-of-fit measures from CFA for three alternative models

Global goodness of fit 8-factor model 7-factor model 5-factor model

GFI 0.808 0.826 0.830 AGFI 0.742 0.761 0.772 RMR 0.084 0.079 0.083 RMSEA 0.113 0.112 0.114 CFI 0.730 0.778 0.761

Local goodness of fit 8-factor model 7-factor model 5-factor model

Coefficients of 6 out of 24 items 3 out of 21 items 7 out of 19 items determination (COD) for with COD Ͻ 0.4 with COD Ͻ 0.4 with COD Ͻ 0.4 included items 2 factors with 1 factor with AVE 2 factors with Average variances AVE Ͻ 0.5 (factor Ͻ 0.5 (factor AVE Ͻ 0.5 explained (AVE) for A ϭ 0.35; factor B ϭ 0.48) (‘perfectionistic’ϭ0.48; included factors B ϭ 0.48) ‘novelty-fashion consciousness’ ϭ 0.36

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