Loading...

Information Overload and its Influence on Customer's Decision. How does information overload affect customer`s decisions towards smartphones?

Master's Thesis 2018 98 Pages

Business economics - Marketing, Corporate Communication, CRM, Market Research, Social Media

Excerpt

Table of Contents

List of Tables

List of Figures

List of Abbreviations

1 Introduction
1.1 Background Information
1.2 Purpose of Research and Research Objectives
1.3 Outline of the Thesis

2 Literature Review
2.1 Consumer Decision-Making
2.1.1 Consumer Decision Process
2.1.1.1 Need Recognition
2.1.1.2 Information Search
2.1.1.3 Evaluation of Alternatives & Purchase Decision
2.1.1.4 Consumption, Post-Consumption Evaluation & Divestment
2.1.2 Influencing Consumer Decision Process
2.1.2.1 Individual Influences
2.1.2.2 Environmental Influences
2.1.2.3 Psychological Processes
2.2 Information Overload
2.2.1 Definition Information
2.2.2 The Concept of Information Overload
2.2.2.1 Causes for Information Overload
2.2.2.2 Consequences of Information Overload
2.2.3 Evolution of Information Overload
2.3 Brand Management
2.3.1 The Role of Brands
2.3.2 Brand Equity
2.3.2.1 Brand Awareness
2.3.2.2 Perceived Quality
2.3.2.3 Brand Associations
2.3.2.4 Brand Loyalty

3 Research Model and Hypotheses
3.1 Decisions based on different Criteria
3.2 Information Overload influences Decisions

4 Research Methodology
4.1 Procedure of the Survey
4.2 Questionnaire Design

5 Analysis of Data
5.1 Descriptive Analysis
5.3 Comparison of Groups
5.4 Relationship Choice Criteria to Decision
5.5 Moderator Effect

6 Findings and Discussion of Study
6.1 Overview of Findings
6.2 Findings of Research Model

7 Conclusion
7.1 Theoretical Implications
7.2 Practical Implications
7.3 Limitations and Implications for Further Research

Bibliography

Affidavit

Appendix

Abstract

In today’s society, consumers have too many products and brands to choose from. With the support of technology we receive more and more information from companies and this information overload brings consequences with it. Consumers suffer from confusion and frustration because they cannot consider every information in their decision process.

Therefore, the present thesis analyses the influence of information overload on decisions towards smartphones. A broad literature review is conducted in order to get a better understanding of the consumer decision process, the influencing factors, the concept of information overload and brand behavior. In order to answer the research question, a quantitative online survey is performed. An experimental task of either one of two tables with different level of information load is implemented. The two groups can be compared in order to reveal significant differences. Furthermore, the moderator effect of perceived information overload on satisfaction of a decision is analyzed. First, the participants were asked about their satisfaction of the decision, based on what choice criteria they evaluated and the information overload is measured. Additionally, the participants assess their information search, brand and evaluation behavior in the questionnaire.

The results show that information overload has a moderating effect on decisions. Moreover, technical, economical and personal criteria have a negative influence on decisions, whereby social criteria increase the satisfaction of a decision within an information overloaded environment. Additionally, a difference of experiencing information overload between women and men is discovered. The study discloses the impact of consumer’s information overload on decisions. Thus, information overload leads to a change of satisfaction on a decision.

List of Tables

Table 1: Choice Criteria to Evaluate

Table 2: Question Set – Variable Decision

Table 3: Question Set – Variable Choice Criteria

Table 4: Question Set – Variable Information Behavior

Table 5: Gender Distribution between Groups

Table 6: Smartphone Choice Distribution between Groups

Table 7: Smartphone Choice Distribution between Smartphone Use

Table 8: DEC and PIO between Groups– Mean Report

Table 9: Brand Behavior – Mean Report

Table 10: Search Behavior – Mean Report

Table 11: Evaluation Behavior – Mean Report

Table 12: Significance in Groups– t-test

Table 13: Significance in Gender– t-test

Table 14: DEC Composition – Mean Report

Table 15: Cronbach´s Alpha DEC

Table 16: Regression Analysis of CC – Model Summary

Table 17: Regression Analysis of CC– ANOVA

Table 18: Regression Analysis of CC– Coefficients

Table 19: PIO Composition – Mean Report

Table 20: Cronbach´s Alpha PIO

Table 21: Regression Analysis of Moderator – Model Summary

Table 22: Regression Analysis of Moderator – ANOVA

Table 23: Regression Analysis of CC– Coefficients

Table 24: Effects of Moderator PIO

Table 25: Result Summary of Hypotheses

List of Figures

Figure 1: Consumer Decision Process

Figure 2: Information Overload as the Inverted U-Curve

Figure 3: Top 10 Ranking of World's Best Brands 2017

Figure 4: Research Model

Figure 5: Procedure of Survey

Figure 6: Distribution of used Smartphone Brands

Figure 7: Moderator Effect on TCC to DEC

List of Abbreviations

illustration not visible in this excerpt

1 Introduction

“In the age of technology there is constant access to vast amounts of information. The basket overflows; people get overwhelmed” – Criss Jami, Venus in Arms

This thesis investigates in the topic of information overload in more detail and brings it into relationship with decisions. Mintzberg (1975) investigated in problems caused by information overload in decision-making and noted that “brains have difficulty processing all the relevant information” (p. 17). This first chapter gives an overview of the thesis. It provides some background information about the topic, formulates the underlying research question and outlines the structure of the thesis. Furthermore, the chosen methodological approach for the empirical part of the study is explained.

1.1 Background Information

In our information society, in which we are living today, is too much choice of products and so much opacity for customers. Consumers cannot spend their time to compare every product before making a choice. And even if they had enough time, customers cannot be completely sure about whether they detect the right product for them or not (Kapferer, 2012). Customers suffer from so called “information overload”.

A large amount of information has the positive effect that customers have more access to alternatives and features, which can satisfy their needs. But on the other hand, if the customers receive a huge amount of information, they need more time and effort to process the information. Because our brain has limited cognitive capability, consumers suffer from poor decision-making as a result of too much information (Li, 2017).

Researchers try to find the right and most efficient amount of information, which should be represented to consumers, for the last few decades. The most common known studies about information overload on consumer side are the ones from Jacoby (1974; 1977; 1984). The focus of those studies was the efficiency of buying decisions. The study of 1974 has shown that an increase of a total amount of information will lead to a decrease in decision efficiency – decision efficiency decline because of information overload.

In the world of the internet and digitalization, it is getting easier and cheaper for companies to flood the minds of customers with information. Technology enables to increase the information load and overwhelm their decision process (Li, 2017).

Especially the commercialization of the Internet during the mid 1990s lead to the enormous usage of the World Wide Web and it became an essential information tool for people (Wu & Lin, 2006). Therefore, consumers get a huge amount of information about products easily and quickly. Especially when buying a product, companies provide information because they want to satisfy their customers. But with this increasing amount of information, consumers experience consequences of information overload due to the limited processing capacity (Gao, Zhang, Wang, & Ba, 2012).

Most of the time consumers are clear about their purchase criteria, but they are unclear about the brand, especially when they are in the choice environment. Jacoby’s definition of information overload not only refers to enormous amount of product offers, but also to the extensive information each product carries. Therefore, customers get confused. According to Mitchell & Papavassiliou (1999), the main confusion sources hereby are overchoice of products, similarity of products and inadequate information conveyed though marketing communication.

Especially in the purchasing environment, in which people buy different products, making a decision and choosing a product is our daily business. In the grocery store, electronic store or online clothing store, we always have to decide which product or brand we want to purchase. Strolling through an Austrian electronic shop, we can find over 50 smartphone provided by 12 brands. Browsing through the same store online we can find 248 variations of smartphones offered by 13 brands. How can consumers choose the most appropriate product for them? Is this enormous amount of information, provided by companies and products, influencing our decisions? If yes – how? Therefore, this thesis investigates in information overload in a decision process and the goal of this thesis is to find possible answers for these questions.

1.2 Purpose of Research and Research Objectives

In this highly investigating topic, it is necessary to understand main key words around consumer decision and information overload. This research aims at giving the reader an overview of what information overload is, why and how it occurs for a consumer in a decision process. Therefore, it is important to distinguish common definitions and terms.

To get a basic understanding of consumer behavior, this research will evaluate different theories and concepts. Those will mainly focus on consumer decision processes and information overload out of literature and scientific research.

The thesis analyses why information overload happens on consumer side. The research enhances and further represents how information overload influences a decision in a decision process. Moreover, it is relevant to investigate in what happened over the last years with information and exploit changes until the year 2018. This will primarily happen with a historical analysis. In addition to this, the research investigates also in brand management. Hence, it gives the reader an understanding of brand behavior.

From this background information, we can derive the following research question, in order to accomplish the purpose of this study:

How does information overload affect
customer`s decisions towards smartphones?

This formulated research question is the basis of this thesis and functions as a guideline. The goal is to define a possible impact of information overload on decisions. To understand how the mentioned research question is answered, the next subchapter outlines the content of the thesis and explains the procedure of the study briefly.

The main purpose of this research is to inform readers about this topic and enlarge the view to apply this knowledge in their daily business. This research thesis addresses especially to employees in product management or marketing management, which are in responsibility of communication strategies and activities for a company, brand or product. But it is also interesting for brand managers or people, which are in direct relation to the brand strategy of a consumers product. It is important to understand how consumer decide in an information overloaded society to communicate products in the right way. Furthermore, it is essential to build and increase awareness of the consequences of information overload to the consumers. Thus, the readers should be able to use the findings of the study to create marketing activities in a more efficient and effective way.

The methodology of this study has a quantitative approach. A detailed literature review supports to develop hypotheses. An online survey is sent to gather required data and consequently, to analyze and evaluate the results until we can confirm or reject the hypotheses. Hereby, the statistical software PSPP of GNU supports the data preparation and analysis of the results.

1.3 Outline of the Thesis

The thesis is structured in seven chapters. The first chapter gives an overview and outlines the current situation and research problem. To get a throughout understanding of the theories, a literature review was conducted. Therefore, chapter two gives theoretical insights into the consumer decision-making process, information overload and brand management. The process of the consumer decision is described and additionally, factors that influence the decision. Moreover, the concept and development of information overload is discussed. Furthermore, this chapter also gives a brief insight into brand management and how brands influence consumer behavior and decisions.

The third chapter presents the proposed research model. It summarizes what theory says about information overload and its influence on decisions. Furthermore, it concludes the literature review in order to get an understanding of how the hypotheses are formed, the theory of the relationships is discussed. After discussing the relevant literature, chapter four explains the research methodology and the research design in detail that was used to find answers for the research model. In chapter five, the collected data is statistically analyzed and the research model and hypotheses are tested. Chapter six discusses the findings of the study and includes interpretations if and/or how information overload influences decisions. Chapter seven summarizes the thesis and additionally provides theoretical and practical implications. In addition, suggestions for further research and limitations of the thesis terminate the thesis.

2 Literature Review

In this chapter, the existing literature is reviewed and discussed in order to explain the most important aspects of this thesis. First, the consumer decision process and its influences are described in detail. Next, the concept of information overload is discussed in further specifics, why it occurs and what consequences it has. Additionally, the history of information overload is explained in order to understand the concept more specifically. The third part of this chapter is concerned with the topic brand management, which gives more insight into brand behavior of consumers and the importance of brands in a decision.

2.1 Consumer Decision-Making

Typically, a decision is characterized as “choices made from among alternatives”. This means that there are at least two options available, from which the decision-maker selects only one of the options. In such a situation, the decision maker has to collect information that makes it possible to evaluate the options and compare them to the alternative (Case, 2007). The purpose of this chapter is to introduce the nature of consumer decision-making and to discover what variables shape and influence this process.

2.1.1 Consumer Decision Process

An individual goes through several steps in order to make a decision for goods and services. According to numerous authors (Kotler & Keller, 2012; Kardes, Cronley, & Cline, 2014; Kimmel, 2012; Rosenbaum-Elliott, Percy, & Pervan, 2015) there is a common model of consumer decision-making, which has five stages consumers typically go through: problem recognition, information search, evaluation of alternatives, purchase decision and post-purchase evaluation. Different textbooks and researches slightly use different terms, but primarily they focus on those five stages. Nevertheless, Blackwell et al. (2006) suggests a consumer decision model of seven stages, including consumption and divestment – see Figure 1. All stages are influenced by various factors. The following subchapters will discuss the most relevant steps of the Blackwell and Miniard model for this thesis and their influencers.

illustration not visible in this excerpt

Figure 1: Consumer Decision Process

Own design, From Consumer Behavior (p. 85), by Blackwell et al.
Copyright 2016 by Thomson Business and Economics.

According to Kotler and Keller (2012), not all stages are always passed by consumers. Blackwell et al. (2006) distinguish especially between three situations to explain this phenomena: initial purchase, repeat purchase and impulse purchase. When an initial decision is happening, the decision process is especially rigorous and detailed. Buying a repeat purchase product like a toothpaste, you directly go from a problem need to a purchase decision. A repeat purchase is mostly made based on routines and habits. An impulse purchase is an unplanned and action triggered buying, which involves a high sense of emotions.

2.1.1.1 Need Recognition

A “need” can be described as an “inner motivational state” (Grunig, 1989). The hierarchy of needs by Abraham Maslow is probably the most popular categorization of needs. Maslow (1954) determines that needs motivate individual humans. In order to move up the hierarchy to satisfy higher level of needs such as esteem and self-fulfillment, individuals have to satisfy their basic physical and emotional needs as a first step. This hierarchy offers a structure to formulate various needs of goods or services for a group of people as a result of their human needs (Dorner, Gorman, & Calvert, 2015).

Kotler and Keller (2012) support the hierarchy of needs in the following: needs can be triggered by internal or external stimuli. Internal stimuli are basic needs of a person such as hunger or thirst – lower levels of needs. External stimuli inspire our thoughts about a desire – higher levels of needs. We can refer this to the want-got gap, which explains the acknowledgement of the difference between the current state – got – and the desired situation – want (Kardes et al., 2014).

A second approach to think about needs is introduced by Tester (1992), which reported on elderly people’s needs. She states that needs are directly connected to main life events, as for example major illness or retirement. Furthermore, Moore (2002) mentions that each individual discovers a life event in a different way due to the fact of different background and experiences. However, many social needs fall outside of the idea of life events and cannot be argued with this approach. Nevertheless, it is important to know that needs evoke in different situations of life and for every individual in a different way.

Blackwell et al. (2006) state that the starting point of every purchase decision is a need or a problem of a consumer. According to them, a need is recognized when an individual has the feeling that there is a difference between the perceived ideal and the actual state. A product is bought when a consumer believes that the ability of this product solves a problem more than it costs. A need recognition is sometimes also called problem recognition, since a product can solve a problem. Marketers often help to raise the awareness of the consumers of unperceived problems or needs with communication actions to promote a need. Nevertheless, our needs are additionally influenced by environmental and individual factors – see Figure 1.

2.1.1.2 Information Search

If the problem is recognized, consumers start gathering information. They get more open and receptive to information about a product. To a larger extend, they could even become active information searchers when they visit stores, ask friends or go online (Kotler & Keller, 2012). Information searching is the purpose of searching for information triggered by a need to satisfy some goal. It is a conscious process to respond to a need or fill in gaps of knowledge (Jackson & Farzaneh, 2012).

Case (2007) strictly defines information searching as an active and purposive activity whereby Ikoja-Odongo and Mostert (2006) state that passive and unintentional activities can very well be a part of the searching process.

Passive information search can be described as the passive reception of information such as exposure to advertising on TV, radio or smartphones (Wilson, 2000), whereby active information search is the conscious activity to look for information (Moorthy, Ratchford, & Talukdar, 1997).

Actively looking for information can occur as internal and external information search (Ghalandari, Norouzi, Masoudi, Aminpoor, & Taheri, 2016). Internal information search is the active process of searching for information, which is already stored in our memory. Punj and Staelin (1983) argue that internal memory information can be retrieved with little cognitive effort. External information search occures when the enviroment around an invidivual is included, for example family, friends and the marketplace, because the necessary information was not previously gained or is not able to be recalled from the brain (Ghalandari et al., 2016).

External information can be received by marketer-dominated and non-marketer-dominated sources. Marketer-dominated sources refer to everything, in which a company purposely informs and persuades customers, such as websites, adverting, point-of-sale materials. In addition, customers externally also search for non-marketer-dominated sources. This type of information sources include family, friends, consumer reports and mass media. They cannot be controlled directly by a company. As a consumer is exposed to external information, the process of the stimuli begins: exposure, attention, comprehension, acceptance, retention (Blackwell et al., 2006).

Depth and length of the search process is based on environmental and individual factors. If customers are unsatisfied with a product or brand, the next information search will be expanded and include alternatives of competitors. That is the reason why companies want to keep customers satisfied rather than losing them to competitors (Blackwell et al., 2006). A study has shown (Richard, Zynep, & Joseph, 2002) that information search activities are more efficient if the individual is in a positive mood. This is because they can process information more efficiently and identify relationships between information more useful. Due to this efficiency, people with a positive mood are in general easier to delight and faster in making a decision.

After searching for information and before evaluating, the consumer already forms a consideration set of a few products or brands, which a person seriously considers to decide on (Hoyer & Brown, 1990). Moreover, the whole search process is influenced by environmental factors, which will be described later in the thesis.

2.1.1.3 Evaluation of Alternatives & Purchase Decision

After identifying the consideration set in the information search process, these alternatives will be evaluated. In this stage, consumers start to compare products and brands with what is most equivalent to their satisfaction of need. With this the consideration set can be narrowed down (Blackwell et al., 2006).

According to Fahy and Jobber (2015), a consumer uses various attributes to evaluate products. Such attributes are known as choice criteria: technical, economic, social and personal choice criteria. Different customers use different choice criteria in order to decide – see Table 1. Technical criteria are based on the performance of a product. In many purchase situations, customers justify their decision in rational technical terms. Economic criteria are related to the aspects of costs of a product. Most of the customers start taking the whole life-cycle costs into account. Social criteria concern the impact of a product on an individual’s perceived relationship with other people and the influence of social norms. And lastly, personal criteria are related to the individual in psychological ways. Hereby, emotions are important attributes of a consumer decision process.

Table 1: Choice Criteria to Evaluate

illustration not visible in this excerpt

Note: Own design, From Foundations of Marketing, by Fahy & Jobber. Copyright 2015 by the McGraw-Hill Education.

The choice criteria are also influenced by environmental and individual factors, since customers are searching for information that reflect their individual needs, values, and lifestyle. In addition, the level of satisfaction of previous purchased products impacts the evaluation process as well (Blackwell et al., 2006).

During the stage of evaluation of alternatives in such a purchase decision-making environment, people additionally tend to use rules, or so called heuristics, to evaluate options. The following explains two heuristics in short: In applying an elimination-by-aspects heuristic, we identify an attribute that is most important and when an option does not meet the identified criteria it is eliminated as a possibility (Tversky, 1972). When we use the conjunctive heuristic, we set a minimum requirement level for each attribute and we choose the one option that fulfills the minimal requirement for all attributes (Kotler & Keller, 2012).

If the customer evaluated all options and eliminated possibilities so that only one product or brand is left, the purchase has to be executed. In addition, questions regarding where to buy, how much to buy, when to buy and how to pay need to be answered. (Kotler & Keller, 2012). At the end the consumer knows where to buy what, in what quantity, at what time, with what payment method.

2.1.1.4 Consumption, Post-Consumption Evaluation & Divestment

After the purchase act, consumption can occur – this means the customer can start using the product. Consumption can happen any time, in any situation, how and how often the consumer wants – appropriate for the product. The consumption process is also influenced by environmental factors such as motivation or attitude towards a product. Therefore, it can be distinguished between users and nonusers. The number of users and nonusers is interesting for companies in several ways. The number of current users of a product category can specify the attractiveness of the market to a company – the larger the market is, the bigger is the attractiveness. The number of current nonusers states the growth potential within this product category (Blackwell et al., 2006).

Using the determines out how positively or negatively a consumer feels about the decision. Based on the consumption experience of the consumer, they will change their attitude toward the consumed product. This change is usually determined as satisfaction and dissatisfaction. This level of satisfaction determines whether or not consumers would buy the same product from the same brand again (Kotler & Keller, 2012). A negative or positive feeling determines if a consumer has a sense of satisfaction or dissatisfaction towards a product. A sense of satisfaction is there when the expectation of a consumer is matched with the perceived performance. When the performance of and the experience with the product does not meet the expectations, dissatisfaction occurs. How long a product lasts until the last stage of divestment is reached, is determined by the way the customer is using it (Blackwell et al., 2006).

Divestment is the last stage of the consumer decision process, shown in Figure 1. There are different ways of how a consumer can dispose the product after using it.

Mostly, there are four different ways to do so: First, a consumer can choose to sell it to another consumer. Second, the product can be traded in for another product. Third, a consumer can throw the used product away. Fourth, the product can just be given away without anything in return (Kotler & Keller, 2012)

2.1.2 Influencing Consumer Decision Process

The consumer decision process behavior is shaped by many different variables. According to Blackwell et al. (2006), mainly individual differences, environmental influences and psychological processes, which are again divided into several sub-factors, influence the consumer decision process. The following sub-chapters only give an overview of influencing factors rather than explain them in detail, since there is limited capacity to analyze and describe them fully.

2.1.2.1 Individual Influences

Demographics, psychographics, values and personality influence the behavior of a consumer. Blackwell et al. (2006) states that demographics give information about who is buying a product, where psychographics tell us why individuals buy a product. Psychographics help to measure lifestyle, which means what consumer activities, interests and opinions are.

Values are another way of understanding the differences of decision-making of consumers. Especially the research of psychologist Shalom Schwartz is influential on value research. He tried to discover a set of values, which almost everyone holds. Honesty, wisdom and ambitious are some of them. Values differ from attitudes because they are more general, abstract and ordered by their importance (S. H. Schwartz, 1992).

Moreover, personality plays also an important role. Kassarji (1971) defines the term personality as the following: “the concept of consistent responses to the world of stimuli surrounding the individual.” This means it is the nature of an individual, which influences the way of how someone responses to the environment.

In addition, three major resources of consumers influence the decision as well: time, money and information processing capabilities. All of them have explicit limitations. Furthermore, the intensity of motivation specifies how strong consumers are motivated to satisfy an identified need. Besides, the consumer knowledge of a product or brand determines the extension of internal and external search (Blackwell et al., 2006).

2.1.2.2 Environmental Influences

Consumers live in an environment which is complex and therefore, they affect the consumer. In this context culture is an important influencer. According to Wallendorf and Reilly (1983), culture is “set of socially acquired behavior patterns transmitted symbolically through language to the members of a particular society”.

In addition to that, status of the social class influences your decisions. It is defined as “a division of a society based on social and economic status”[1], which share similar interests, values and behaviors. Furthermore, people with whom we associate closely are personal influencer. This means we often try to conform to expectations and norms of other people and take their advice and information about consumption choices. A decision also depends on the situation a person is in (Blackwell et al., 2006).

2.1.2.3 Psychological Processes

Psychological processes can influence our decision process in various ways: information processing, learning and change of behavior. Information processing covers the following steps: exposure, attention, comprehension, acceptance and retention – as you can see in Figure 1. The underlying theory was formed by Hovland et al. (1953) – attention, comprehension, acceptance – which was furthermore, broken down by McGuire (1968). Everyone is exposed to different marketing activities such as traditional media (radio, television, newspapers) and new media (websites, online ads, search engine, e-mails, mobile). One of them catches your attention and the message is analyzed. If the message is accepted, the information is stored in the memory. Whereby the amount and content of information are significant aspects in information processing (Blackwell et al., 2006). Moreover, learning also plays a role in decision-making because learning requires knowledge that is acquired to modify a behavior[2]. This means it is the process in which experience leads not only to a change of knowledge, but also to a change of behavior.

2.2 Information Overload

This chapter has the goal to introduce the concept of information overload. It gives insights in what information is, how information overload is caused and what the consequences of an information overloaded situation is. It is also important to give an overview of the evolution of information overload in order to understand the phenomena even better. Therefore, a historical analysis of literature was conducted.

According to Buchanan & Kock (2012) a decision-making process begins with enough information that is available for the decision-making. And if there is not enough available, information can be gathered. Also, most of the literature assumes that there is rather less than more information accessible. But in the 21st century, there is often far more information available – more than we actually need.

2.2.1 Definition Information

Fox claims in Case (2007) that “information seems to be everywhere. We talk of its being encoded in the genes ... disseminated by media of communication ... exchanged in conversation ... contained in all sorts of things ... Libraries are overflowing with it, institutions are bogged down by it, and people are overloaded with it ... [yet] no one seems to know exactly what information is”.

For the first time the word “information” appeared in one of Chaucer’s tales between the year 1372 and 1386 (Schement & Ruben, 1993). Using a word for more than six hundred years would result in compliance on the meaning of the word – on the contrary. Especially during the last few decades, the meaning of “information” multiply because it has begun to be used as an empirical topic. However, the word “information” is more complex than many other words because it is used to describe numerous distinct concepts, which are overlapping each other (Case, 2007). This is the reason why it is hard to find a proper definition.

Researching on the online dictionary Merriam-Webmaster, information is “the communication or reception of knowledge or intelligence”[3]. Bateson (1987) determines “information” as any difference which is a difference to a conscious or human mind.

This means, information is whatever seems to be significant to a human individual, no matter if it appears externally (environmental) or internally (psychological). As we can see, the concept of “information” has a very broad definition for a common word and subsequently yet no widely accepted definition for this term.

Other authors employed definitions of information that are similar to Bateson’s. Another popular attempt at explanation is the one from George A. Miller (1968), who says that information is “any stimuli we recognize in our environment”. Brenda Dervin (1976) denoted the term as the following: “Recognition of patterns in the world around us.” Another definition by Richard F. Carter (1965) specifies information in a broader context: “Anything that exists psychologically for a person.”

As we can see, many authors tried to create a common and broad definition, which would be acceptable for some areas of investigation. In addition to the above mentioned problem, with devoting the term information, there are five specified types of requirements for information, which turn out to be problematic:

- Utility: Dretske (1998) pointed out that “information isn’t much good if it does not do anything”, which means that a different that does not do anything is not really necessary in society. Wersig and Neveling (1975) additionally state that information needs to be useful and able to be communicated in order to reduce uncertainty otherwise it is not information.
- Physicality: Buckland (1991) argues that information can appear in physical form, but Krippendorff (1984) contradicts that information must be present in a physical form at some point of level. This can be reduced that at least thoughts have physical dimensions, namely the human nervous system with electrical impulses (Case, 2007).
- Structure/Process: According to Losee (1997) information is “the values of characteristics in the process’ output”. The process input can be sensed from the environment or recall from the human memory. The process output is informative values. In addition, Belkin and Robertson (1976) state that information is competent of “transforming structure”, which means information transforms the state of knowledge of the recipient.
- Intentionality: Bowers and Bradac (1982) see intentionality as a requirement for communication – exchange of information among people. On the other hand Stonier (2012) has a different view, which says that information “does not need to be perceived to exist. It does not need to be understood to exist.”
- Truth: Fox (1983) hold that information does not need to be truthful. On the contrary Budd (2011) insists on meaningfulness and truthfulness of information in order to define the term.
As we can see literature goes apart, when it comes to what requirements information needs to have in order to call it information – consequently to devote the term.
Buckland (1991) investigated in the meaning and landscape of information and found a useful grouping regarding uses of the word information. He identified three major uses of the term:
- Information-as-process: In this category information refers to the communication of knowledge – the act of informing – where the state of knowledge of an individual is changed. Information-as-process is intangible and therefore, you cannot touch or measure it directly.
- Information-as-knowledge: In this grouping information is used where information is perceived (information-as-process) and knowledge is communicated regarding a specific fact, subject or event. Information-as-knowledge is also intangible.
- Information-as-thing: In this case information is used for objects, like data or documents because they are observed as being informative. Information systems can only deal with this type of information.

The definitions of the groupings might not satisfy everyone, but the typologies at least help to analyze and characterize the uses of information. They support us to understand the meaning of information rather than identify a single universal term.

In the process of defining information, we might identify that “knowledge” and “data” are related concepts (Case, 2007). Machlup (1983) investigates in this issue, if information can be synonymous for data and knowledge, highlighting that the three terms are traditionally treated in a hierarchy, where data is at the bottom and knowledge can be found at the top. Therefore, it is relevant for this research to distinguish between them.

According to Ackoff (1989), data are “symbols that represent properties of objects, events and their environments”. If, for example, a person fills out a form with her or his name, address, age, date of birth etc., these enrollments are data. Information whereas is relevant, usable, significant, meaningful or processed data. People can ask questions with “who”, what”, “when” or “where” and the data is transformed into an answer to a question – this means data becomes information. For example, if the question is “What is the speed limit for cars on freeways in Austria?”, there are many different speed limits recorded as data. Now the processing of data, which generates information, often narrows down data. In this case, a car is allowed to drive 130 km/h on freeways. The next step of the hierarchy is knowledge, which is often translated into know-how. Know-how “allows an agent to promote information to a controlling role” (Frické, 2009), which means that information is converted into instructions. For example, the data of the speed limit becomes information when asking “What is the speed limit for cars on freeways in Austria” and information becomes the instruction to slow down the car because the driver drives faster than 130 km/h. Information, in this case, is transformed into knowledge about know-how-to-fast-to-drive.

We can derive from this that data is “basic, discrete, objective facts” about something, where on the other hand information is data, which is set into context and “provides a useful story”. Thereby, knowledge provides culturally understanding and insights about how and why (Jennex, 2009). In addition, Machlup (1983) states that “information is acquired by being told, whereas knowledge can be acquired by thinking”, which corresponds with the definition of Ackoff (1989). But still the boundaries of the word are indistinct.

With all definitions and theories we have analyzed, we can recognize that there are too many views about the term information between experts. Hence, it is not possible to determine the term for a widely accepted definition. We can conclude that information is a stimulus that is significant for a human individual, which must meet one or more of the requirements mentioned above. In sum, we interpret that information requires the contribution of a human mind.

2.2.2 The Concept of Information Overload

In every day communication, the term “information overload” indicates a condition in which people receive too much information. The concept of information overload depends on the perspective of context in which it occurs (Eppler & Mengis, 2004). Based on different problems researchers try to solve, they mainly investigate in the context of information systems (e.g., Ackoff, 1967), accounting (e.g., Schick, Gordon, & Haka, 1990), organization science (e.g. Galbraith, 1974) and marketing (e.g. Malhotra, 1982). Within marketing and more specifically within consumer behavior research, information overload became an essential topic of research – especially since the early 1970s, in which the consumer brands rapidly increased.

In the context of consumer behavior, information overload can be defined as the situation in which the information supply exceeds the limited human information processing capacity. As a consequence dysfunctional effects such as stress and confusion arise and a decreased decision quality is the result (Jacoby et al., 1974; Malhotra, 1982; Meyer, 1998). This means if too much information is provided to the consumer, information overload occurs. Because we have a limited processing capacity, information overload leads to less efficient performance and decision-making.

The research of Jacoby, Speller, & Kohn (1974) is the first one that investigated in information overload and the efficiency of buying decisions. Therefore, they define the concept of information overload as the following:

“... there are finite limits to the ability of human beings to assimilate and process information during any given unit of time, and that once these limits are surpassed, behavior tends to become confused and dysfunctional.“

In another study of Jacoby (1977), he adds that in an information overloaded situation it gets more difficult to identify relevant information for a decision-making process. Malhotra (1982) employed a methodology similar to Jacoby et al., where he supportively found out to the first study of Jacoby et al. (1974), that up to a certain point the performance of an individual has a correlation with the amount of information an individual receives. Along those lines, Malhotra defines information overload in this way:

“If consumers are provided with ‘too much’ information at a given time, such that it exceeds their processing limits, overload occurs leading to poorer decision-making and dysfunctional performance”.

In general, the phenomena of information overload can not only be described as verbal definitions, it can also be represented as a diagram, as you can see in Figure 2. Information overload can be seen as an inverted u-curve in a decision-making environment. According to Eppler (2015) the visual description of information overload illustrates that information overload is the negative effect of the increasing amount of information volume on decision accuracy. It shows that more information does not always cause better decisions.

illustration not visible in this excerpt

Figure 2: Information Overload as the Inverted U-Curve

From Communication and Technology, by Eppler. Copyright 2015 by De Gruyter Mouton.

Buchanan and Knock (2012) argue that this u-curve can only be supported under conditions of time pressure. However, a study (Mayer, Sonodas, & Gudykunst, 1997) provides contradiction and found out that information load impacts the decision quality but time pressure does not.

Furthermore, Eppler and Mengis (2004) suggest another way of describing the term information overload and define it with the following formula:

information processing requirement > information processing capacities

A given volume of information, which refers to requirements, needs to be processed within a certain time. If the capacity of an individual to process information is smaller than the volume of information in this given time period, information overload occurs.

All these are attempts to define information overload, which are gathered from different sources. At the end, all agree that information overload is the phenomena where the volume of information is too much for our brain to process. But much more important than the definition is the reason why information overload occurs.

2.2.2.1 Causes for Information Overload

According to Eppler & Mengis (2004) the main reasons for information overload can be categorized in five issues: the information itself, the person receiving or processing information, the tasks or processes which need to be completed, the information technology and the organizational design. One factor that is influencing the occurrence of information overload is the organizational design. Changes in the organizational design such as centralization (Schneider, 1987) or shifts towards interdisciplinary teams (Bawden, 2001) develop the need for communication and coordination (Eppler & Mengis, 2004). Since we investigate in a consumer decision environment, the organizational design will not be relevant for this study.

Another important overload cause is the nature of information itself. Schneider (1987) stresses out that specific characteristics of information such as uncertainty, ambiguity, novelty, complexity, or intensity, determine information overload. In addition, Simpson and Prusak (1995) state that changing the quality of information can have a positive effect on the possible occurrence of information overload. The information processing capacity can be increased by improving the quality of information – individuals can use information with higher quality quicker and better than unstructured and unclear information.

The person and his or her experience or attitude is another reason why information overload occurs. Earlier studies argue that the capacity of information processing of an individual is limited (Jacoby et al., 1974; Galbraith, 1974; Malhotra, 1982), but more recent studies show that personal skills (Owen, 1992), experience level (Swain & Haka, 2000) or motivation of an individual (Muller, 1984) are limitation factors. Hoq (2016) adds that people lack from identifying information needs, recalling information and using information to meet needs. Therefore, information characteristics have to meet the individual’s cognitive skill in order to process information (Pijpers, 2010).

Another essential cause is the tasks and processes an individual has to complete with support of information. Eppler & Mengis (2004) report that the less a process is routinely reoccurring and the more complex its configuration is, the higher is the volume of information and the bigger is time pressure on the individual. Pijpers (2010) mentioned an example, in which end-users have to perform a greater information search than professional intermediaries. His opinion is that professionals identify the core information more rapidly since they routinely are more skilled than a normal users, which feel hence more overloaded.

Finally, the use and misuse of information technology is a dominant reason why information overload became critical in the 1980s and 1990s. The development and expansion of new communication and information technologies such as the Internet during this time is a crucial source of information overload (Bawden, 2001). Edmunds and Morris, (2000) argue that information technology increases the amount of information that an individual receives, which is potentially useless. The increase amount of an information volume enables individuals to use information for decision-making (Bawden, 2001). As a result, information overload can also negatively influence an individuals’ decision performance, which is discussed in the next subchapter.

Furthermore, Hoq (2016) identified that information overload is usually caused by the presence of numerous sources of information, the abundance of information, the struggle to manage information, the irrelevance of received information and the lack of time to understand information. Hoq stated, that today the main problem of information overload is to get “the right information at the right time in the right format”.

2.2.2.2 Consequences of Information Overload

Information overload can have a variety of consequences on different levels that affect an individual that deals with information. When the information volume exceeds the information processing capacity, an individual can be negatively affected on a performance level. In such a situation, an individual gets enormous difficulties to identify and select relevant information (Jacoby, 1977), consequentially a person gets highly selective and ignores a large amount of information (Bawden, 2001; Herbig & Kramer, 1994). In addition, the relationship between details and overall perspective is weakened and hence cannot be identified anymore (Owen, 1992; Schneider, 1987). Information, that is more attractive rather than significant, gets more attention – we begin to filter out information and therefore take mental shortcuts (Eppler, 2015). People need more time to handle information and to marke a decision (Jacoby, 1984), which is then not even of adequate accuracy (Malhotra, 1982). In such an environment, individuals have troubles to differentiate products and brands (Schneider, 1987).

The extensive cognitive load, that information overload brings with it, can also negatively affect an individual on a personal level. Frequently mentioned consequences of too much information are demotivation (Baldacchino, Armistead, & Parker, 2002), lower satisfaction (Jacoby, 1984), false sense of security, more specifically over-confidence (Jacoby, 1984; Meyer, 1998; O’Reilly, 1980), and cognitive strain, stress and confusion (Malhotra, 1982).

In connection with information overload there are two concepts, which are often used: information anxiety and information fatigue syndrome. Wurman, Leifer, Sume, & Whitehouse (2001) dedicated an entire book to information anxiety and defined it as the following: “Information anxiety is the black hole between data and knowledge. It happens when information doesn’t tell us what we want to know.”

This definition does not state that information overload causes anxiety, but parts of the book do so. The following scenarios create an atmosphere, in which information anxiety is more likely: not understanding information, tremendous amount of information, not knowing about existence of specific information, not knowing where to find specific information and no access to information (Girard & Allison, 2008).

The information fatigue syndrome simply indicates that the human brain cannot cope with such a great volume of information. The technologies’ process, store and deliver capacity of information grow very fast, whereas human brain capacity remains the same. The problem is the irrelevant step of going through all information to get what you need. This let people feel frustrated, angry, helpless and impatient (Pijpers, 2010). The worldwide study “Dying for Information” (Reuters, 1996) investigated on effects of information overload. They found out that managers suffer from increased tension and health issues because of information overload. According to Heylighen (2002), psychologist David Lewis analyzed the results and later suggested the term information fatigue syndrome to explain the symptoms of information overload.

2.2.3 Evolution of Information Overload

Even though information overload seems like a modern term, humans deal with information a much longer time. It is crucial to analyze and understand the evolution of information and its dissemination in the society. The history of information began long before digitalization. In the early civilization of the 13th century, information overload did not exist because only little information was available. Though, the creation of paper and writing tools made documentation of information easier (Strother, Ulijn, & Fazal, 2012). The invention of the printing press by Gutenberg in 1436 played a key role in information overload context. The printing press made it possible for the society to gather information and knowledge (Pijpers, 2010). Until then, the overload experience was limited to the privileged elite. But because printing books got cheaper, also normally educated people could afford them ever since. In the Age of Renaissance, individuals and institutions started to collect copies of antique texts and artifacts, and as a result, the essence of libraries and museums was created (Blair, 2011).

During the 18th and 19th century information innovation made it possible to spread technology and change humans’ homes and workplaces. During the industrial revolution, encyclopedias, magazines, copyright laws and mass media made their first appearance. The first time information overload was identified as a possible problem was in the 20th century. Information and media was available for the masses. The 24/7 mass media became a main source of information, news and entertainment (Strother et al., 2012). We started to produce more information than our brain capacity could actually process. Personal and organizational strategies, which were used before, were no longer effective (Pijpers, 2010). Therefore, in the early 70s the number of consumer brands exploded. During this time researchers became aware of the information overload phenomena and started to investigate in fields of marketing, accounting, organization science and management information science. (Eppler & Mengis, 2004).

In the 1990s the Internet boomed and exploded. The World Wide Web gained popularity and online commercial activities grew (Strother et al., 2012). At the end of the 20th century people recognized that they are not able to handle the information flood. First psychological diseases as a result of information overload such as information anxiety and information fatigue syndrome emerged (Pijpers, 2010). The phenomenon of information overload got worst in the digital age of the 21st century. Social media, YouTube, mobile communication and electronic gadgets overflow humans with information. In this early stage of the 21st century, people download, distribute and use data – they are main players in this field (Strother et al., 2012).

This short historical analysis makes us aware of the growth of information and highlights the most important events in history regarding information overload. Gutenberg laid the foundation for information overload. Information became available for the mass during the industrialization, which then again exploded with the World Wide Web. With people actively producing and distributing information today, the information flood is everywhere.

2.3 Brand Management

A consumer product is successful, if the target market is able to distinguish one product from another one. Marketers use the main tool, which is called branding, to differentiate their products from the product of the competitor. (Lamb, Hair, & McDaniel, 2017).

According to Lamb et al. (2017) branding has some major purposes. First, a branding helps to identify a brand. It gives the opportunity to distinguish companies’ products from all others. Many brand names are known by the consumers and signify quality. Second, branding gives opportunities to identify the product a consumer wants to buy again or wants to avoid. Accordingly, branding helps to satisfy the customer in terms of repeat sales. Third, branding assists the progress of selling new products. If you have an appreciated and well-known brand, it is intensively useful to introduce new products.

Schwartz (2007) argues that our decisions are seduced by branding. He brought up the example of the cigarette industry: Especially in the 1930s market researchers found out that smokers, who did not know which brand they are smoking, couldn’t tell the difference between them. As a result, if one particular brand wanted to be sold more, they either needed to make the brand distinctive or let consumers think that it is distinctive. Since then, the method of selling a product with an associated lifestyle was born – branding. Therefore, brand management is needed in order to make a brand more known, bought and engaging – in sum, it is necessary to gain power of a product (Kapferer, 2012).

[...]


[1] Social Class (n.d.) In Oxford dictionary. Retrieved from https://en.oxforddictionaries.com/definition/social_class,

Retrieved April 17, 2018

[2] Learning. (n.d.) In Merriam-Webster’s collegiate dictionary. Retrieved from https://www.merriam-webster.com/dictionary/learning, Retrieved April 17, 2018

[3] Information. (n.d.) In Merriam-Webster’s collegiate dictionary. Retrieved from https://www.merriam-webster.com/dictionary/information, Retrieved April 9, 2018

Details

Pages
98
Year
2018
ISBN (eBook)
9783668768758
ISBN (Book)
9783668768765
File size
1.2 MB
Language
English
Catalog Number
v432627
Institution / College
Management Center Innsbruck
Grade
1
Tags
Marketing Information Overload Decision Entscheidungen

Author

Share

Previous

Title: Information Overload and its Influence on Customer's Decision. How does information overload affect customer`s decisions towards smartphones?