Executive Summary

Consumer behaviours are very important in the determination of various actions that consumers make in their daily activities. Consumer behaviours can be considered to be subject to a specified set of theories that influence the actions of consumers in a particular way. On a regular basis individuals are faced with a variety of decisions to make. The decision making exercise can be challenging to consumers due to various attributes.

This essay explains the behaviour of three different individuals faced with an option of choosing accommodation in Melbourne, Australia. The essay illustrates how the three respondents choose the accommodation alternatives through the use of a decision matrix. It also gives the real choices of accommodation options by the respondents and provides an explanation of the difference between the real choices of accommodations and the options derived from the decision matrix. It also gives an analysis of the factors that affects the respondent’s choices of accommodation and different rankings of the evaluation criteria.

 

Table of Contents

Executive Summary. 2

Introduction. 4

Accommodation Options. 4

Evaluative Criteria. 5

Creation of Decision Matrix. 5

Evaluative Criteria Ranking for Person A.. 5

Evaluative Criteria Ranking for Person B. 6

Evaluative Criteria Ranking for Person C. 6

Rating of Accommodation Option for Person A.. 7

Rating of Accommodation Option for Person B. 7

Rating of Accommodation Option for Person C. 8

Application of Compensatory Decision Rule. 8

The Accommodation Option for Respondent A.. 9

The Accommodation Option for Respondent B. 11

The Accommodation Option for Respondent C. 12

Analysis of Choices. 14

Conclusions. 16

Bibliography. 17

 

 

 

Introduction

Accommodation is one of the basic needs of all human beings. All human beings require an accommodation as a basic need just like clothing and food. Many factors are considered by individuals when they are making decision of acquiring an accommodation. Some of the factors that are considered when choosing a type of accommodation include price of the house, location, income, religion, distance from the workplace and age among others. The weight of these factors however varies from one individual to another. In order for an individual to determine an accommodation options that can best suit his or her personal need there is a need for the assessments of all the accommodation options that are available.  The accommodation options can be assessed through the use of a decision matrix. The decision matrix ranks the accommodation options in terms of their weights. It also ranks the criteria that are used for selection in terms of their importance. Compensatory decision rule calculation can therefore be used to determine the accommodation option of an individual. This process involves the use of the decision matrix of the individuals to come up with the best alternative.

Accommodation Options

There are numerous accommodation options that are available to individuals in Melbourne Australia. Some of the accommodation options that can be considered by the individual include.

1. Renting a two bedroom apartment within the city centre of Melbourne
2. Sharing a three bedroom double storey town house with a friend in the outskirts of Melbourne city centre
3. Renting a two bedroom apartment located at 501 Little Collins Street in Henty House Building
4. Buying an elegant three bedroom apartment a long St Kilda Road in Melbourne
5. Renting a one bedroom furnished apartment at Bourke street Melbourne
6. Buying a Victorian home in the George Street, Northern Melbourne

Evaluative Criteria

For an individual to choose an accommodation option, there are some of the evaluative criteria that must be followed. These evaluative criteria determine the actions of an individual in choosing the accommodation. Some of the evaluative criteria which are important in choosing an accommodation option include the following.

1. The price of the accommodation
2. Distance of the accommodation from the workplace
3. Accessibility to public transportation
4. Safety and security of the location
5. Gender and age of the house mate
6. Accessibility to healthcare centre and recreational facilities

Creation of Decision Matrix

There are two main types of decision matrix that can be created to capture this scenario. The main decisions matrix created include evaluative criteria decision matrix and accommodation option decision matrix for each of the three respondents.

Evaluative Criteria Ranking for Person A

Evaluative criteria	Importance score
Criterion 1	25
Criterion 2	10
Criterion 3	15
Criterion 4	30
Criterion 5	10
Criterion 6	10

Evaluative Criteria Ranking for Person B

Evaluative criteria	Importance score
Criterion 1	30
Criterion 2	5
Criterion 3	20
Criterion 4	25
Criterion 5	15
Criterion 6	5

Evaluative Criteria Ranking for Person C

Evaluative criteria	Importance score
Criterion 1	20
Criterion 2	15
Criterion 3	10
Criterion 4	35
Criterion 5	5
Criterion 6	15

Rating of Accommodation Option for Person A

Accommodation Option	Rank
Option 1	3
Option 2	1
Option 3	2
Option 4	4
Option 5	2
Option 6	5

 

Rating of Accommodation Option for Person B

Accommodation Option	Rank
Option 1	3
Option 2	1
Option 3	4
Option 4	5
Option 5	2
Option 6	4

 

Rating of Accommodation Option for Person C

Accommodation Option	Rank
Option 1	2
Option 2	1
Option 3	5
Option 4	3
Option 5	4
Option 6	4

 

Application of Compensatory Decision Rule

The compensatory decision rule can be used to determine the accommodation option that an individual will take. It can also be used to show the evaluative criteria which are important to an individual (Montgomery 1983). From the above evaluative criteria ranking and accommodation option ratings it is possible to determine the appropriate accommodation alternative from the compensatory decision rule for each of the three persons named A, B and C.

The Accommodation Option for Respondent A

The decision matrix for the respondent A can be used in the calculation of the accommodation option that respondent A will take. The decision matrix for respondent A will be as shown in the diagram below.

	Option 1	Option 2	Option 3	Option 4	Option 5	Option 6
Criterion 1	25 ( 3 ) =  75	25 ( 1 ) =  25	25 ( 2 ) = 50	25 ( 4 ) = 100	25 ( 2 ) =  50	25 ( 5 ) =125
Criterion 2	10 ( 3 ) = 30	10 ( 1 ) =  10	10 ( 2 ) =  20	10 ( 4 ) =  40	10 ( 2) =  20	10 ( 5 ) = 50
Criterion 3	15( 3 ) = 45	15 ( 1 ) = 15	15 ( 2 ) = 30	15 ( 4 ) = 60	15 ( 2 ) = 30	15 ( 5 ) = 75
Criterion 4	30 ( 3 ) = 30	30 ( 1 ) = 30	30 ( 2 ) = 60	30 ( 4 ) = 120	30 ( 2 ) = 60	30 ( 5 ) = 150
Criterion 5	10 ( 3 ) = 30	10 ( 1 ) = 10	10 ( 2 ) = 20	10 ( 4 ) = 40	10 ( 2 ) = 20	10 ( 5 ) = 50
Criterion 6	10 ( 3 ) = 30	10 ( 1 ) = 10	10 ( 2 ) = 20	10 ( 4 ) = 40	10 ( 2 ) = 20	10 ( 5 ) = 50
Sum	240	100	200	400	200	500

Using the compensatory decision rule for the decision matrix of respondent A, it is clear that the accommodation option with the highest value is accommodation option 6 which has a value of 500. This implies that respondent A will choose accommodation option 6 which is the option of buying a Victorian home in the George Street, Northern Melbourne.

From the compensatory decision rule respondent A is likely to buy a Victorian home in the George Street, Northern Melbourne. This is however not the real preference of the respondent. The real preferences option of the respondent was the option of buying an elegant three bedroom apartment a long St Kilda Road in Melbourne.

The difference in the accommodation option from the decision matrix and the reality of the respondent’s accommodation option can be explained using various consumer behaviour theories.  One of the theories that can be used to explain the difference is the rational behaviour of the consumer. This theory states that a consumer will behave in away that will ensure that he or she maximizes the benefits that are derived from a product (Blundell 1988). In this regard respondent A will be more satisfied with option A since it will be near the city centre which is his working place. The three bedroom house can also be having some of the modern facilities that the consumer is interested in such as gym and swimming pool. This option will make the consumer feel that his money is spent on ideal house hence the utility of the consumer is fully maximized.

Another consumer behaviour theory that explains the respondent decision of buying a Victorian home in the George Street, Northern Melbourne as opposed to the accommodation option derived from the decision matrix is the budget constraint that the respondent A faces. The price of accommodation option 6 which involves buying a Victorian home in George Street, Northern Melbourne is expensive as compared to the option of buying an elegant three bedroom apartment a long St Kilda Road in Melbourne. The respondent will not be able to afford the price of the Victoria house due to budget constraint hence will opt to buy an apartment.

The Accommodation Option for Respondent B

	Option 1	Option 2	Option 3	Option 4	Option 5	Option 6
Criterion 1	30  *  3 =  90	30  *  1 =  30	30  *  4 = 120	30  *  5 = 150	30  * 2 = 60	30  *  4 = 120
Criterion 2	5  *  3  = 15	5   *  1  =  5	5  *  4 = 20	5  *  5  = 25	5  *  2  = 10	5  * 4  =  20
Criterion 3	20  *  3 = 60	20  * 1 = 20	20 *  4 = 80	20  *  5 = 100	20  *  2 = 40	20  *  4 = 80
Criterion 4	25  * 3 = 75	25  *  1 = 25	25  *  4 = 100	25  *  5 = 125	25  * 2 = 50	25  * 4 = 100
Criterion 5	15  * 3 = 45	15  * 1  = 15	15  * 4 = 60	15  * 5 = 75	15  * 2 = 30	15  * 4 = 60
Criterion 6	15  * 3 = 45	15  * 1 = 15	15  * 4 = 60	15  * 5 = 75	15  * 2 = 30	15 * 4 = 60
Sum	330	110	440	550	220	440

 

Using the compensatory decision rule for the decision matrix of respondent B, it is clear that the accommodation option with the highest value is accommodation option 4 which has a value of 550. This implies that respondent B will choose accommodation option 4 which is the option of buying an elegant three bedroom apartment a long St Kilda Road in Melbourne.

The accommodation option that is derived from the decision matrix is different from the real accommodation option that is chosen by the respondent B. The respondent B in reality chose to share a three bedroom house with a friend instead of buying the elegant apartment as suggested by the results obtained from the decision matrix. The difference in the accommodation option chosen by the respondent and that which is obtained from the decision matrix can be explained using two main theories of consumer behaviour. The first theory that can be used to explain this difference is the consumer preference theory which ranks the consumer tastes and preference in a given order (Samuelson 1938). The respondent B might have preferred to stay with friends as opposed to buying an apartment. This can be based on the personal experience, taste and preference of the respondent. In this case the respondent will consider the option of living with a friend as the best option as opposed to buying an apartment which is obtained from the results of the decision matrix.

Another theory that can be used to explain the difference is the consumer maximization theory. In this case the consumer will maximize his or her utility through sharing of the house with a friend. He will be able to share the cost, ideas, and other house obligations by the chosen housemate. The respondent will also enjoy the benefit of living with a friend as he will feel more secure as opposed to staying a lone in an apartment.

The Accommodation Option for Respondent C

	Option 1	Option 2	Option 3	Option 4	Option 5	Option 6
Criterion 1	20 * 2 = 40	20  * 1 = 20	20  *  5 = 100	20 * 3 = 60	20 * 4 = 80	20 * 4 = 80
Criterion 2	15  * 2 = 30	15  * 1 = 15	15 * 5 = 75	15  * 3 = 45	15 * 4 = 60	15 * 4 = 60
Criterion 3	10  * 2 = 20	10  * 1 = 10	10  *  5 = 50	10  * 3 = 30	10  * 4 = 40	10  * 4 = 40
Criterion 4	35  * 2 = 70	35  * 1 = 35	35  * 5 = 175	35 * 3 = 105	35 * 4 = 140	35 * 4 = 140
Criterion 5	5  *  2 =  10	5  *  1 =    5	5  *  5 = 25	5  *  3  = 15	5  * 4 = 20	5  *  4  = 20
Criterion 6	15  * 2 = 30	15  * 1 = 15	15  * 5 = 75	15  * 3 = 45	15  * 4 = 60	15  * 4 = 60
Sum	200	100	500	300	400	400

Using the compensatory decision rule for the decision matrix of respondent C, it is clear that the accommodation option with the highest value is accommodation option 3 which has a value of 500. This implies that respondent C will choose accommodation option 3 which is the option of renting a two bedroom apartment located at 501 Little Collins Street in Henty House Building.

This accommodation option obtained by the decision matrix is different from the real option that is chosen by respondent C. In reality option C chose the option of renting a one bedroom furnished apartment at Bourke street Melbourne. This can be explained by the consumer behaviour of pride. Staying in a furnished house can be comfortable and offers pride to the consumer. It can also be attached to the consumer belief that staying in a furnished house is regarded as a modern way of living hence reflect high living standard and self esteem to the consumer (Lancaster 1966).

Analysis of Choices

The accommodation options chosen by the respondents are different for all the three respondents. The difference in the accommodation options for the respondents can be explained using various theories and factors. Some of the factors that can be used to explain the differences in accommodation choices of the respondents include demographic factors such as age, sex, income, race, ethnicity, family background, religion and place of work (Gilbride & Allenby 2004).

Age can influence the accommodation option of an individual through consideration of specific facilities that support the old age population in the society (Johnson 1990). In specific, old people prefer places that are quiet, secure and near health care faculties.  For example, the accommodation option of respondent A of buying an elegant three bedroom apartment a long St Kilda Road in Melbourne can be explained in terms of demographic factors. The respondent might be a middle aged person who is in need of an elegant apartment. The place of work might have also influenced this accommodation option. The respondent might be working somewhere near St Kilda Road. In terms of finance the respondent might be financially stable and able to buy an apartment. This makes him or her opt to buy an apartment instead of renting an apartment. The choice of buying an apartment can also illustrate that the respondent was having a family hence opt for a permanent house for the family members hence an accommodation option can also be determined by family orientation and obligations (Gardner et al 2005).

Gender can also determine the type of accommodation option that an individual can make. Gender of individuals can influence the taste and preference of a person. For an example female will always look at accommodation that are more appealing and secure. The income of an individual can also be another factor that determines the choice of accommodations option. An individual with high income will consider buying an accommodation as opposed to renting an apartment. Income empowers an individual economically hence make him or her able to afford the best alternative that satisfies his or her needs. Lack of adequate income will make an individual to make choices that might not satisfy his or her need by choosing accommodation options that are cheap in prices.

Ethnicity and belief is another factor that can affect an individual accommodation option. Some ethnic communities are subject to some beliefs that restrict them to a particular design of houses or some specified location (Shiloh et al 2001). This will determine the location of an accommodation as well as the type of accommodation option to be chosen.  Religion can also affect the decision of a respondent in choosing an accommodation option that responds to personal religion affiliations (Thaler 1980). For example Christians can choose not to share accommodation with individuals from other religions such as Muslims. This can make them to avoid accommodation options that make them to share rooms with friends from different religion beliefs. It can also restrict them from acquiring accommodations from areas that are regarded as strongholds of other religion groups.

Personality can also play an import role in the choice of accommodation option chosen by an individual. Personality can make an individual to choose an accommodation that reflects its status (Raju 1980). Leaders and politicians prefer places that are secure hence regard security as the major factor that determines their accommodation options. The nature of job of an individual can also determine the accommodation option by considering design and location (Koufaris 2002). Some jobs such as security and intelligence jobs might require privacy hence the accommodation chosen should be private and secretive in such cases.

Conclusions

The decisions of the respondents in choosing the accommodation options can be determined by various factors that include demographic and personality factors. These factors often vary from one individual to the other hence explains the difference in choices of the accommodation options by the respondents. Decision matrix is one of the ways that can be used to determine the decisions of an individual consumer with respect to making decisions of the best alternative products. The decision matrix considers various alternatives as well as the criteria for selecting the alternatives.  The results derived from the decision matrix may be different from the reality of the consumer decision due to various theories of consumer behaviours.

Bibliography

Blundell, R., 1988, Consumer behaviour: Theory and empirical evidence–A survey. The Economic Journal, 98(389), 16-65.

Gardner, I. L., Browning, C., & Kendig, H., 2005, Accommodation options in later life: retirement village or community living?. Australasian Journal on Ageing, 24(4), 188-195.

Gilbride, T. J., & Allenby, G. M., 2004, A choice model with conjunctive, disjunctive, and compensatory screening rules. Marketing Science, 23(3), 391-406

Johnson, M. M., 1990, Age differences in decision making: A process methodology for examining strategic information processing. Journal of Gerontology, 45(2), P75-P78

Koufaris, M., 2002, Applying the technology acceptance model and flow theory to online consumer behaviour, Information systems research, 13(2), 205-22

Lancaster, K. J., 1966, A new approach to consumer theory. The journal of political economy, 74(2), 132-157.

Montgomery, H., 1983, Decision rules and the search for a dominance structure: Towards a process model of decision making. Analysing and aiding decision processes, 343-369.

Raju, P. S., 1980, Optimum stimulation level: its relationship to personality, demographics, and exploratory behaviour. Journal of Consumer Research, 272-282.

Samuelson, P. A., 1938, A note on the pure theory of consumer’s behaviour. Economica, 5(17), 61-71.

Shiloh, S., Koren, S., & Zakay, D., 2001, Individual differences in compensatory decision-making style and need for closure as correlates of subjective decision complexity and difficulty. Personality and Individual Differences, 30(4), 699-710.

Thaler, R., 1980, Toward a positive theory of consumer choice. Journal of Economic Behavior & Organization, 1(1), 39-60.

 

 

 

 

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