The effects of federal truth in lending legislators (which requires full disclosure of the rate of finance charges and other aspects of a consumer credit transaction) are also unclear. One study showed that although the practice of making such information available apparently improves consumer knowledge of credit rates and charges, it has been found to do little to change credit behavior because of the importance of the retailers in the credit decision. Moreover, it was shown that most consumers (particularly those with lower incomes and education) remained uninformed about interest rates, many did not even understand the concept of interest nor could they calculate it in dollars . Thus, this study concluded that consumers must not simply be provided with information but should also be taught to understand it and use it.
Many of the foregoing research studies on consumer information programs indicated that consumers do not heavily use them. What causes this lack of use? Some researchers suggest that the problem may be the result of information over load, that is, there are limits to the amount of information that consumers can process, hence too much information is dysfunctional for them.
In the first systematic study of information over load, subjects were asked to make decisions on product brands with varying quantities of information. The researchers concluded that as the amount of information increased consumers were less able to select the brand best for them. Yet the information had beneficial effects on the consumer’s degree of satisfaction certainly and confusion regarding her selection. That is subjects appeared to feel better with more information while actually making worse purchase decisions! This result was taken to mean that an information overload phenomenon had been identified. Similar results were found in a succeeding study, in which information overload was observed to be related to an increase in the number of brands. It was found, however that increased information per brand resulted in better decisions.
Critics of these studies raised a number of conceptual and methodological issues. Moreover, reanalysis of the data obtained in these research projects with a more powerful analytical procedure suggested that information overload may not have occurred in the experiments. However, additional research studies have again led to findings of information overload. Thus, additional replication is desirable across other decisions making situations in order to understand the nature and extent of information overload
How does the consumer cope with information overload? There may be several strategies employed to reduce the amount of information actually used in purchase decision making so as not to be overwhelmed by the great amount available. It has been suggested that consumers base their decisions on the most important three to five product attribute dimensions rather than on all of the information available. Another suggestion is that consumers organize and integrate the separate information bits into larger information chunks as described in learning. For example a brand name may serve as the consumer’s basic device for summarizing the impressions and comparisons that exist among brand alternatives in the marketplace.
Although few definitive statements can be made the concept of information overload may become an extremely important issue among marketers, consumerists, legislators, regulators and others who seek to provide even more information to the consumer. The more information is better argument however, may result in American shoppers feeling better but making worse purchase decisions.
For the marketers to provide more information than they now do may also prove to be uneconomical . For instance industry experience indicates that thirty and fifteen second television commercials are economically superior to a sixty second ad, both in terms of recall and sales (except in the case of the product).
Source: Consumer Behavior