Atomic Model of Consumer Mindset Decision-Making: A Patch Group for Positioning Theory
Here is the URL where the Chinese version of this article was published in the Harvard Business Review: https://www.hbr-caijing.com/#/article/detail?id=481200
Abstract: The Atomic Model of Mindset Decision-Making identifies five key elements considered in the consumer's mental activity process: JBTD (Job-to-be-Done), latent budget, emotional identification (brand preference), functional benefits, and category. Companies and brands can better cope with market competition by understanding these decision-making elements.
Consider why consumers made their purchase decisions in the following scenarios:
Today's consumers can choose from thousands of brands and products. With choice comes decision-making, and the more choices there are, the more complex the decisions become. Consumer decisions are not absolutely rational, nor are they necessarily structured; they are often a combination of emotional and rational elements. Current research generally divides consumer decision-making into behavioral and mindset decision-making. While there is extensive theory on consumer behavioral decision-making, such as the SOR model, Kotler's consumer behavior choice model, and the 5A and EBK models, these focus on decomposing consumer behavior to infer decision-making logic, with little systematic analysis of consumer mental activities, which discusses consumers as behavioral individuals.
In practice, consumer behavior is mainly influenced by their own mental activities. Only by understanding how consumers make decisions can companies navigate the changing times and find the key to market success. This article explores consumer mindset decision-making and proposes the key nodes that constitute the consumer decision-making path. In real scenarios, consumer mindset decisions often result from a mix of these elements.
What is Mindset? How Does Mindset Make Decisions?
To explore consumer mindset decision-making, one must first understand how consumers process information. In the past, to understand consumers and make high-quality consumer insights—understanding why consumers choose Brand A over Brand B—consumer researchers have conducted extensive and in-depth studies by observing and analyzing consumers' emotional responses (feelings), cognitive responses (thoughts), and behavioral responses (actions). Emotional responses refer to the emotions generated when we hear about a brand or product, such as liking or disliking; cognitive responses refer to our understanding of a brand or product; and behavioral responses directly point to consumer actions. These three responses ultimately target the most critical link for businesses: consumer decision-making.
After noticing and understanding products and services, how do consumers move towards a decision? The key link here is information processing. It is not enough for consumers to just receive information from companies; they also need to structure the complex information they receive. After effectively organizing and categorizing the information, consumers form a relatively clear judgment path when making decisions. There exists a gap between information acquisition and information application: we can think about our own information processing methods, imagining the consumer's information storage behavior like operating a computer, dividing the hard drive into C, D, and F drives, and then categorizing and storing information in different folders on different drives according to file category or size.
Consumer purchasing behavior may occur hours, months, or even years after they have processed knowledge, so how to help consumers store and systematically organize information becomes an urgent problem. Mindset decision-making helps consumers reorganize stored information to better make purchase decisions. Breaking down "mindset" to "mind" and "wisdom", "mind" represents emotion, intuition, and cognition, while "wisdom" is rationality, thinking, and logic. Using Daniel Kahneman's dual-system thinking model presented in the book Thinking, Fast and Slow, human thinking and decision-making involve the participation of both System 1 and System 2. System 1 is a fast, intuitive, and emotional thinking mode, relying on experience and memory, reacting quickly, and making decisions effortlessly. System 1 is the "mind"; whereas System 2 is "wisdom," a relatively slower and more planned thinking mode, also more reliant on logic, thus it requires more attention and brain computing resources to perform relatively strenuous thinking, including more complex calculations.
The physiological characteristics of the human brain determine the features of mindset decision-making. The primary duty of the brain is to ensure the survival of the individual, and brain activity increases energy consumption by 15%-20%, hence the brain is naturally resistant to thinking, a "cognitive miser." Therefore, what factors can simplify the difficulty of consumer mindset decision-making, allowing consumers to make decisions more lazily, significantly affecting the outcome of mindset decision-making. This also explains why positioning theory is so popular in China: by influencing consumers' System 1, allowing users to make purchase decisions without thinking, eliminating the need for search and analysis in the middle. Positioning emphasizes that brands should occupy a unique cognitive position in consumers' minds for a category or certain characteristics, such as thinking of Coca-Cola when thinking of cola, or thinking of Volvo when thinking of safer and more reliable cars.
Is it really that simple to influence or even change consumer mindset decision-making?
Positioning theory actively connects with consumers' System 1, allowing consumers to make decisions with less effort, simplifying the mental decision-making process for brands to some extent, but the categories and characteristics emphasized by positioning are just one element of mindset decision-making, not the whole. For example, Xiaomi's SU7 was pre-sold 80,000 units overnight, which also slapped the die-hard fans of positioning theory—Xiaomi is not the category leader in new energy vehicles (at least most people think of NIO, XPeng, and Li Auto when thinking of new energy vehicles), but Xiaomi's strong brand momentum resonated with and was loved by consumers, making its cars instantly popular and completely breaking the rational predictions made by a bunch of so-called experts before the new car launch.
Consumer Mindset Decision-Making Atomic Model
From the results, consumer mindset decision-making ultimately involves choosing and allowing several brands to enter their "Buying Box." During the consumer decision-making process, multiple factors can be entry points for brands to enter the consumer's Buying Box. This set of factors that can influence consumer mindset decision-making and change their cognition can be called the "Consideration Set." To influence consumer decision-making, companies need a strategic, focused approach to building consumers' preferences for different decision elements (Consideration Set) for the brand. In other words, occupying a category or anchoring a position is not the purpose of building a brand; the ultimate goal of a brand is to enter the consumer's decision-making preference Buying Box.
What are the decision elements that influence consumer decision-making? Returning to the four questions raised at the beginning of the article:
If it was not a business trip but a privately paid personal trip, your choice of Eastern Airlines might be because it had the lowest pricing; perhaps because you are a frequent flyer member of Eastern Airlines, allowing you to accumulate miles and exchange more benefits; it might also be that the flight time was the most comfortable; or perhaps you were traveling for leisure, and the most important thing was a comfortable and pleasant experience, with Eastern Airlines generally operated by large aircraft, and business class even allowing passengers to lie down and rest. This choice reflects functional benefits.
Choosing Lululemon might be because you saw other women in the yoga studio, at the mall, wearing the same yoga pants, and you thought they looked charming and confident, and you hoped to look just as good when wearing them; or perhaps, you identify with Lululemon's expression of women's values, believing that Super Girl is the contemporary woman's proper recognition and attitude, liking the friendly atmosphere brought by its yoga community, and believing that consuming and wearing the brand is a way for women to live more confidently and freely. This choice reflects emotional identification (brand preference).
Product pricing matches consumer payment capacity and value on two dimensions that influence consumer decision-making: one is whether the product pricing is within the consumer's budget range; the other is whether the product value matches the consumer's consumption needs. When making decisions, consumers often unconsciously evaluate the purpose they want to achieve, as well as the brands and products in the Buying Box, and compare the two. Choosing to buy Maotai for gifting is because its brand pricing of two bottles of liquor under 5000 yuan matches your budget, while Hermès is not within the budget, and Maotai meets its functional attributes as a gift: in China, Maotai is considered a hard currency; it is error-free for gifting. It also satisfies your willingness and ability to pay: how much people are willing and able to pay for this relationship. Many times, what specific brand or gift to send and what special effects the gift needs to have become unimportant decision factors because as long as the gift meets a certain gift-giving standard, what to give becomes unimportant. This choice reflects a latent budget.
You considered your usage scenarios: travel, meetings, business negotiations, needing a portable, durable, stylish, and professional-looking laptop. At that moment, you might remember the advertisement for ThinkPad, recalling the thin body of the Carbon series products and the carbon black shell in the image. If you had previously used ThinkPad products, you would also remember the iconic little red dot on the keyboard; thinking of yourself attending some important meetings with this convenient, thin laptop, not feeling tired despite the long journey. When you thought of your needs, it seemed as if real images appeared in your mind, all telling you: ThinkPad is the best office computer, and other computers did not give you a unique business style, so you made an effortless decision. This choice reflects the category.
From the analysis of the above four questions, we can see that the latent budget, emotional identification (brand preference), functional benefits, and category are the key nodes in the consumer decision-making path, which are the key decision elements set (Consideration Sets) mentioned above. In real scenarios, consumer mindset decision-making is also often a result of a mix of these four elements. So, what is the key to influencing consumer mindset decision-making? When a company wants to build an advantage in consumer mindset decision-making, what is the primary decision element for consumer decision-making? In layman's terms, what is the first element to consider when consumers have a task (JOB)?
The greatest contribution of positioning theory to the business world is to deeply embed the primacy principle of the mind, and the limitation of positioning theory is precisely here: it only emphasizes certain functional benefits or category differentiation as the primacy in consumer decision-making, ignoring other elements. In many cases, consumer decision-making is not like this, such as, do people buy Nike because it leads in sales? When buying yoga wear, will they definitely choose Lululemon, the category leader?
To more comprehensively and scientifically study consumer mindset decision-making, we propose the Mindset Decision-Making Atomic Model (see the "Mindset Decision-Making Atomic Model" diagram) and supplement the four major elements of mindset decision-making mentioned above with JBTD (Job-to-be-Done). These five elements form the three-tier structure of the Mindset Decision-Making Atomic Model: the central core is the Mindset Decision-Making Start Layer: JBTD (Job-to-be-Done), i.e., situational task, which is the starting point of all consumer decision-making behaviors. Just as the number of protons and neutrons in the nucleus determines the nature of the atom, JBTD reveals the most fundamental reason why consumer decision-making behavior exists. The second layer is the Mindset Decision-Making Differentiation Layer, similar to the electron layer of the nucleus. Those with a certain understanding of microphysics know that the location of electrons is essentially a probability cloud, and the elements of emotional identification, functional benefits, and category in the Mindset Decision-Making Differentiation Layer are similar to electrons: consumer mindset decision-making is often comprehensive and complex. This causes any decision element to be potentially activated as the primary element in consumer mindset decision-making, transitioning to the most prioritized or most heavily weighted consideration factor. The outermost layer is the Mindset Decision-Making Constraint Layer: latent budget. It is called latent because, before buying something, we generally have a basic expectation of the product price we can accept, usually a range. All consumer decisions ultimately need to match the latent budget and product pricing. Influenced by rational judgment and emotional feelings, sometimes consumer choices break through this range.
We want to emphasize that all elements in the Mindset Decision-Making Atomic Model can become the primary element of consumer decision-making under certain circumstances. Different brands need to selectively realize primacy in certain elements according to their own situation and competitive environment to stand out in the homogeneous competition of the industry.
Below, we look at each element as the primary element in turn.
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Job to be Done is the nucleus of the Mindset Decision-Making Atomic Model and the source and essence of all consumer mindset decision-making. The inventor of disruptive innovation, Christensen, creatively proposed the Job-to-be-Done theory (JBTD) with a focus on deeply insighting consumers' jobs-to-be-done: people strive to improve their lives every day, not simply buying products, but hoping to use products to solve specific problems in life scenarios. Compared to classic marketing methodologies, the biggest change is shifting from starting with people to starting with scenarios, realizing the landing of needs. True demand insight must start with scenarios, finding the problems users want to solve, not just what kind of products, but more importantly, using products to solve problems encountered in certain scenarios. Therefore, JBTD can also be called situational tasks.
JBTD is both the primary element of consumer demand insight and can also become the primary element of consumer decision-making. The phrase "Keep heatiness away, drink Wanglaoji, drink Wanglaoji" strongly associates the Chinese people's emphasis on preventing heatiness with scenarios like hot pot, barbecue, and eating spicy food. This allowed the Chinese herbal tea industry to jump from a niche market to a market worth tens of billions of RMB. JungKwanJang is a traditional Korean ginseng brand, and in 2012, they launched a Korean ginseng essence EVERYTIME product, using portable small bar packaging, so that consumers could drink it anytime. If only using traditional theories to view this product, the core selling point might just fall on the functional benefits of nourishing the body and prolonging life, such old-fashioned positioning naturally hard to attract young consumers. In the early stage of EVERYTIME's launch, young users aged 20 to 30 accounted for only 5%. To this end, JungKwanJang adjusted its strategy, deeply exploring the private life scenarios of young users—frequent overtime, tiring work, irregular life, often staying up late, while exploring what the JOB is in these scenarios, such as self-reward at home, energy replenishment in the gym, and conveying care through gifts to friends. JungKwanJang strives to associate its new product with the JOB of young consumers in these scenarios, creating a JBTD-first brand. By 2020, EVERYTIME's annual sales had approached 200 million bars, with the proportion of young people rising to 15%.
The most basic is often the most core. JBTD has the most direct and greatest impact on mindset decision-making. If a brand can directly establish a connection with certain JOBs, then other decision elements such as emotional identification, category, and functional benefits become less important in the decision-making process, and the decision-making path also becomes shorter. Even in some cases, it is possible to break through people's latent budgets. For example, if you encounter a billionaire lost in the desert, to sell him a bottle of water, the most likely response is: name your price.
Emotional identification refers to the degree of emotional identification consumers have with a brand's symbol or philosophy, that is, consumers' most intuitive impression and emotional understanding of the brand from their self-set perspective. Due to the diminishing nature of information transmission, it is not completely equivalent to the brand information transmitted by the business side. Generally speaking, consumers' consideration of this dimension of the brand is more like a subjective preference based on emotions, often following their own emotional needs.
As one of the elements of mindset decision-making, emotional identification is also the primary element of consumer decision-making. For example, the recent hot-selling Xiaomi car. Mi fans booked without hesitation, willing to pay for an Internet company with zero car-making experience, more out of deep trust in the brand. Although in the actual mindset decision-making process of consumers, after emotional cognition, it is still possible to compare decision-making on the category or functional benefits level, but the priority of emotional identification is the highest. The brand loyalty we often mention is actually consumers' emotional and even irrational preference for a certain company. In this case, the brand becomes the only choice, as long as the consumer's own spending power matches, consumers will not consider other decision factors. In many cases, emotional identification can jump-start and break through consumers' latent budgets, allowing consumers to be willing to pay a price exceeding their original budget or even spending power for a certain brand. From the perspective of enterprise pricing power, such a brand provides high perceivable value to users, thereby stimulating customer purchasing desire and gaining strong bargaining power. If speaking from the perspective of influencing consumer decision-making energy levels, emotional identification is definitely the highest energy level besides JBTD.
The category discussed here is the category redefined in the mind, not the category used by Procter & Gamble to manage products. Category is one of the cores of positioning theory and is often used as the primary element in consumer mindset decision-making. The key for the brand is to strive to become the synonym for a certain category. The mental category is the most simplified cognitive point for consumers when making decisions, which can be differentiated and derived like branches of a tree. If a brand can become the first choice of consumers in a certain category, then the brand will gain tremendous cognitive momentum.
When consumers choose sportswear, they mostly do so for three purposes: professional equipment, casual category, and ordinary styles. The first two purposes are relatively strong, each with relatively mature brands, such as The North Face in the outdoor sports field, and Arc'teryx occupying an absolute advantage in high-end outdoor sports, with a very stable brand audience—these consumers hope that the sportswear they wear is the most expensive and best, and many Arc'teryx consumers are not actually sports enthusiast, buying Arc'teryx directly because it gives people who buy it a sense of prestige and is expensive, to satisfy their social space scenario needs. Arc'teryx now occupies the primary position of the sportswear category in this scenario demand.
If only treating the category as the primary element for the brand to build, there are also some embarrassing aspects. On the one hand, excessive category segmentation continuously stacks the cognitive cost of the category for consumers, which to some extent greatly weakens or loses the value of the category as the primary decision-making element: it is valuable for a brand to be the first in the formal leather shoe category, but if it claims to be "the first in high-end Nappa leather half-heel formal leather shoe category," absolutely no consumer would care. On the other hand, since the category is a relatively objective rational decision-making indicator, it is almost impossible for consumers to break through the latent budget during the decision-making process. This has resulted in many products considered first in the category by consumers, whose prices and profits are not as good as some niche brands considered first in emotional identification in the same category. A typical example is streetwear, the price of Adidas and Nike's hoodies, no matter how expensive, cannot be sold more expensively than Supreme.
Functional benefits integrate functional, quality, consumer experience, and product attribute elements, which are more rational decision-making elements. Starting from certain JBTDs of consumers, functional benefits can also become the primary element of mindset decision-making. Transsion mobile phones conducted multi-dimensional local research for the African market, optimizing the product's facial recognition function and imaging effect through analyzing a large number of local people's photos, especially enhancing the exposure of eyes and teeth, customizing the beauty function for the local predominantly Black consumer base. With this extreme functional benefit point, Transsion mobile phones firmly occupy the "King of Africa" position.
For two-wheeled electric vehicles, range is a crucial functional benefit, especially in the delivery rider community, but does this mean that two-wheeled electric vehicle manufacturers can build a brand by having the longest range as the primary element influencing target users? The answer is no. The reason is simple: under current technological conditions, there are no significant differences among companies, and 90% of the influence on electric bicycle range is due to battery capacity. The simple and crude method to achieve the longest cruising range is to directly stack battery capacity, but this would cause the product's price to soar. To allow electric bicycles to achieve long battery life under most road conditions, the product can easily break the 7000 RMB price point. Taileng electric vehicles are positioned at long-range two-wheeled electric vehicles, also achieving an amazing record of 656.8 kilometers of battery life on a single charge, but this does not solve the consumer's decision-making problem. The market is the answer: in 2022, among the market sales share of two-wheeled electric vehicle brands above 7000 RMB, Taileng accounted for only 0.1%. Therefore, for product functional benefits to become the primary element of mindset decision-making, there are conditions. Firstly, this functional benefit needs to be unique, or at least significantly differentiated from competitors. For example, like ASML in the Netherlands, which is currently the only manufacturer of EUV (Extreme Ultraviolet) lithography machines in the world. Moreover, this functional benefit holds the greatest weight for consumers or users. Like Qualcomm's chips for smartphones, NVIDIA's GPUs for the AI industry. Only if at least one of these two is satisfied can consumers possibly consider it as the primary decision-making element. Accordingly, after achieving this point, due to the supply-demand imbalance caused by the company providing unique products and services, the company also gains stronger pricing power, allowing consumers to leapfrog and break through the latent budget, buying higher-priced products.
The latent budget is the limiting factor in the entire consumer mindset decision-making, and in some scenarios, it can also become the primary element of mindset decision-making. Most of the time, consumers have a relatively clear expectation of the cost they are willing to pay to solve a problem, influenced by rational value judgments and emotional feelings, fluctuating within a range. This is somewhat similar to giving wedding gifts, making decisions based on the closeness of the relationship and the general folk customs of the social environment.
There are even some special cases where the purchasing mindset decision only needs to consider the budget. Just like when the toilet is clogged and you want to buy a toilet plunger, our budget is generally quite clear, usually not exceeding 20 RMB. No one cares whether it is the best-selling plunger, nor do they care whether it is the "Hermès" among plungers, or whether it has an agarwood handle or a plastic handle; a plunger that can unclog the drain is a good plunger. There is also a reverse latent budget mindset decision, like some wealthy people who "only buy expensive, not right," whose focus is on the status and identity represented by spending a lot of money, and the specific category, brand, and functionality are not important. In this case, the consumer's decision-making path is also the shortest, just like JBTD and emotional identification primary decision-making.
The Primary Element for Enterprise Victory
Although every element in the atomic model has the opportunity to become the primary element in consumer mindset decision-making, for different types of enterprises and products, some elements are naturally placed at the primary priority in the default cognition of consumers or users. We try to perform a simple analysis using a four-quadrant matrix based on the high and low product value and its impact on consumers or users (see the "Common Applications of Mindset Decision-Making Primary Elements" diagram).
Products in the first quadrant are called key equipment-type products, characterized by high added value, and at the same time, these products themselves have a great impact on consumers or users, in other words, the trial-and-error cost is very high. In the mindset decision-making of this type of product, the functional benefit element of the product is the primary element of mindset decision-making. For example, a professional skydiving enthusiast, the various parameters and functions of the parachute are crucial to them, so the decision-making process needs to be as rational as possible. The latent budget and emotional identification come second.
The products in the second quadrant are characterized as icing on the cake-type products, characterized by high premium, high added value. Typical products are top luxury goods or top trendy products. Although these products are also expensive, consumers are more concerned about how much additional value beyond the product itself these products can bring them when buying such products. Therefore, JBTD (Situational Task) and emotional identification will become the primary elements of mindset decision-making. The author's team once helped the Shenzhen Hidden Grace Golf Club undergo a comprehensive brand strategy upgrade. This is a pure membership golf club, with relatively high and limited membership starting. The core of the brand strategy is to upgrade from emphasizing functional value attributes to focusing on consumers' JBTD and emotional identification. The emphasis on JBTD and emotional identification made its membership become even more scarce after the brand strategy upgrade.
The third quadrant can be called the suitable for all ages-type products, characterized by most people being able to afford them, basically not needing to consider budget issues. Buying an unsuitable product is not a big problem for them, and the trial-and-error cost is low. Since there are many products of the same category and alternative products, these are also not indispensable products for consumers. Typical representatives are ordinary mass consumer goods. Therefore, consumers need the brand to help them simplify their decision-making difficulty as much as possible during the decision-making process. As mentioned earlier, the category or characteristic first emphasized in positioning theory becomes a trump card. But the definition of the first principle overly simplified by positioning theory only works effectively in the mass consumer goods field relying on large media dissemination, and has little success in high-value or complex consumption decision-making.
The fourth quadrant is the benefit tool-type products. These products have a large impact on consumers themselves, but the added value is not high; or even if the added value is not high, in some emergency special situations, their impact on consumers becomes large. The former is generally consumers' daily production tools or necessities of life. For example, a graphic designer has high performance requirements for computers, so functional benefits are the primary element of their mindset decision-making. The latter, such as when a person suddenly has a tire blowout while driving, then at that moment, replacing it with a usable tire within the budget range is the most important. In this case, the latent budget becomes their primary mindset decision-making element.
The real market environment is not a vacuum state, and consumer mindset decision-making does not depend on the judgment of a single element. The consumer decision-making path is not composed of a single element, even if it is a simple and low-priced consumption decision, it is a complex and changing tortuous path, and no matter how tortuous, it is a decision curve with preferences and weights. Brands need to judge how the decision elements are composed when consumers choose their products, and the weight proportion of several elements, trying to quantify the insight results in this way. Similarly, for the competitive environment and competitor brands' insight, it can also be done by deconstructing their consumer groups' mindset decision-making paths, thereby establishing their own differentiated competitive advantages. This differentiated advantage design can be analyzed with a mindset decision-making element weight curve similar to a value curve.
In the past, the concept of the consumer black box was often mentioned in marketing, and the psychology and decision-making process of consumers were often like a closed black box to enterprises, invisible and elusive, and reality is indeed so. But by deconstructing and deeply understanding the principles of mindset decision-making, we may be able to delve into the consumer mindset decision-making process, thereby adjusting marketing actions and brand strategies, matching consumers' Jobs (tasks), and winning consumers' hearts. To achieve market success, brands must find their own answer to this difficult question—opening the consumer black box.
About auther:
Wang Sai is the executive director and managing partner of Kotler Marketing Group China.
Fudong Li is the project manager of Kotler Marketing Group China.