CONSUMER PSYCHOLOGY & BUYING BEHAVIOR
CONSUMER PSYCHOLOGY
WHAT IS PSYCHOLOGY ?
Psychology
• “Psychology is the science of behaviour and mental processes”
Consumer
• Person who consumes, especially one who uses a product
• Purchaser of goods or services
Consumer Psychology
• “Consumer psychology is the study of how people relate to the products and services that they purchase or use”
THE PSYCHOLOGY OF MARKETING
• Consumer Psychology also defines as:
– How consumers think, feel, reason, and select between different alternatives (e.g., brands, products, and retailers)
– How the consumer is influenced by his or her environment (e.g., culture, family, signs, media)
– The behavior of consumers while shopping or making other marketing decisions
– How consumer motivation and decision strategies differ between products that differ in their level of importance or interest that they entail for the consumer
UNDERSTANDING HOW CONSUMERS VALUE PRODUCTS AND SERVICES
• Psychology research shows that there are 3 dimensions along which consumers value any product or service:
1. Utility –What uses they find for the product.
Ex: staying in touch with their friends, cleaning the kitchen floor, travelling to the office, etc.
2. Experience –What it feels like to use this particular product.
Ex: it makes them feel stimulated, frustrated, inspired, bored, fulfilled, amused, relaxed, etc.
3. Symbolism –What this product says about them.
Ex: that they are cool, popular, sophisticated, technical, important, unusual, talented, etc.
KEY PSYCHOLOGICAL PROCESSES
• The "Black Box -The Stimulus-Response Model" by Philip Kotler is an easy way to realize what influences the buyer:
• When we relate this to the buyer the Philip Kotler’s model gives us an insight on what influences the buyer, this being:
10 Ways to Convert More Customers
1. Help customers break through “action paralysis” by setting minimums.
Customers experience action paralysis in everyday life from many different areas. When making a request for people to take action, clearly identify a minimum in order to help people break through “action paralysis.”
Ex: In a fast-food restaurant massive menu that is unfamiliar and being forced to come up with a choice. You can break right through that action paralysis by setting a minimum which is easier to reach.
Remind your customers about how easy it is to get started ("No payment for the first month") to help them break through action paralysis.
- Make it easy for them to commit.
- Once they have committed, psychology says it’s much harder to walk away because they now have a personal investment.
2. Embrace the power of labels
Sounds like bad advice, right? Not so
• People like being part of groups.
• Labeling in psychology is the act of applying a word, term, or set of words/terms to a person which then results in them fulfilling their own destiny based on those labels.
• Labels give people a sense of identity.
For instance, if you want them to buy your new broom and mop combo,
- can label them as smart shoppers who knows a great deal when they see one.
- Or, you could say that they’re too smart to waste time cleaning and working twice as hard.
3. Understand the three types of buyers
Neuroeconomic experts have been studying human spending habits and patterns, and have discovered three distinct types.
i. Spendthrifts
• They feel that tightwads are too uptight and don’t understand a good bargain. They feel that tightwads miss out on a lot of opportunities.
• They also feel that average spenders overspend and live outside their means. They feel that average spenders live off credit cards and are in a constant cycle of debt, while thinking themselves clever and superior for knowing how to avoid this.
ii. Average Spenders
Believes that tightwads and spendthrifts are silly and stock their money unnecessarily. They think those types of people are not living life to the fullest.
Some live paycheck to paycheck, while others live outside their means via credit cards. They’re used to revolving payments, and manage their lives in a similar fashion.
iii. Tightwads
• Tightwads are the hardest group to sell
• When it is harder and harder to live off one single income alone, people don’t want to give up their hard earned money on something they’re not certain they need.
• They feel the spendthrifts buy anything that says ‘sale’, ‘bargain’ and their purchases are unwise.
4. Use Urgency the Smart Way
• This psychological trait is even more pronounced when something is considered to be rare, hard to get, hard to find, or to own.
• If people are led to the conclusion that they must act now or lose it forever, without having it pushed upon them overmuch, they’ll be more likely to buy.
5. Highlight strengths by admitting shortcomings
• Admitting to honest errors in judgment helps your customers understand that you are still in control of the situation and is actively looking to fix the problem rather than passing the blame to an outside source.
6. Make their brain light up instantly
• Several magnetic resonance imaging (MRI) studies, including one on nicotine addiction, have shown that our frontal cortex is highly active when we think about waiting for something.
• To better appeal to customers, remind them that your product(or service) can solve their pain points fast.
• Focusing on quick arrivals, fast shipping and instant gratification can be just the incentive customers need to buy.
7. Make an enemy
• This doesn’t really mean being abusive to your customers or another company, it’s more connected to labeling (from point number 2 above).
People will become more loyal if you pit your company against another in a fun way.
• some examples are:
• The Mac vs. PC commercials which helped increase the fanboy/girl attitude of Apple consumers .
8. Stand for something
• Communicate clearly and regularly with consumers about your company’s values.
• They may enjoy your products, but the most loyal customers love what you stand for and how you can help them; make it easy for them to see what you’re about.
9. Devil’s advocate
• Marketers can learn an important lesson from this ancient Catholic tradition: research shows that when groups of people have their ideas questioned by a "devil's advocate", they actually increase their confidence in their original stance.
10. Keep ’em on Their Toes
• While customers value consistency, they also like surprises.
• Surprise your customers with unexpected treats and you’ll build brand loyalty.
• Utilize this process of "surprise reciprocity" by creating small WOWs that customers don't expect. Remember, it doesn't have to be a costly endeavor, it really is the thought that counts.
WHY STUDY CONSUMER BEHAVIOR?
• Marketing applications of consumer behavior:
– Market segmentation
– Target market selection
– Positioning
– Product or service decisions
– Pricing decisions
– Distribution decisions
– Promotion decisions
CONSUMER PERSONALITY
• Consumers are complicated.
• If they buys based on only one criteria, it is easier to convince others too.
• Then no need of ad campaigns and large advertising budget.
• Unfortunately consumers are influenced by different stimuli.
• One major influence factor is Consumer Personality.
THE BUYING ROLES
5 roles people might play in a buying decision process
1. Initiator : who first gives the idea of buying the product or service
2. Influencer :whose view or advice influences the decision
3. Decider :who decide on any component of buying decision
4. Buyer :who makes the actual purchase
5. User :who uses the product or service purchased.
CONSUMER BUYING DECISION PROCESS FIVE STAGE MODEL
I. Need recognition / Problem recognition
II. Information search
III. Evaluation of alternatives
IV. Purchase decision
V. Post-purchase behavior.
1. Help customers break through “action paralysis” by setting minimums.
Customers experience action paralysis in everyday life from many different areas. When making a request for people to take action, clearly identify a minimum in order to help people break through “action paralysis.”
Ex: In a fast-food restaurant massive menu that is unfamiliar and being forced to come up with a choice. You can break right through that action paralysis by setting a minimum which is easier to reach.
Remind your customers about how easy it is to get started ("No payment for the first month") to help them break through action paralysis.
- Make it easy for them to commit.
- Once they have committed, psychology says it’s much harder to walk away because they now have a personal investment.
2. Embrace the power of labels
Sounds like bad advice, right? Not so
• People like being part of groups.
• Labeling in psychology is the act of applying a word, term, or set of words/terms to a person which then results in them fulfilling their own destiny based on those labels.
• Labels give people a sense of identity.
For instance, if you want them to buy your new broom and mop combo,
- can label them as smart shoppers who knows a great deal when they see one.
- Or, you could say that they’re too smart to waste time cleaning and working twice as hard.
3. Understand the three types of buyers
Neuroeconomic experts have been studying human spending habits and patterns, and have discovered three distinct types.
i. Spendthrifts
• They feel that tightwads are too uptight and don’t understand a good bargain. They feel that tightwads miss out on a lot of opportunities.
• They also feel that average spenders overspend and live outside their means. They feel that average spenders live off credit cards and are in a constant cycle of debt, while thinking themselves clever and superior for knowing how to avoid this.
ii. Average Spenders
Believes that tightwads and spendthrifts are silly and stock their money unnecessarily. They think those types of people are not living life to the fullest.
Some live paycheck to paycheck, while others live outside their means via credit cards. They’re used to revolving payments, and manage their lives in a similar fashion.
iii. Tightwads
• Tightwads are the hardest group to sell
• When it is harder and harder to live off one single income alone, people don’t want to give up their hard earned money on something they’re not certain they need.
• They feel the spendthrifts buy anything that says ‘sale’, ‘bargain’ and their purchases are unwise.
4. Use Urgency the Smart Way
• This psychological trait is even more pronounced when something is considered to be rare, hard to get, hard to find, or to own.
• If people are led to the conclusion that they must act now or lose it forever, without having it pushed upon them overmuch, they’ll be more likely to buy.
5. Highlight strengths by admitting shortcomings
• Admitting to honest errors in judgment helps your customers understand that you are still in control of the situation and is actively looking to fix the problem rather than passing the blame to an outside source.
6. Make their brain light up instantly
• Several magnetic resonance imaging (MRI) studies, including one on nicotine addiction, have shown that our frontal cortex is highly active when we think about waiting for something.
• To better appeal to customers, remind them that your product(or service) can solve their pain points fast.
• Focusing on quick arrivals, fast shipping and instant gratification can be just the incentive customers need to buy.
7. Make an enemy
• This doesn’t really mean being abusive to your customers or another company, it’s more connected to labeling (from point number 2 above).
People will become more loyal if you pit your company against another in a fun way.
• some examples are:
• The Mac vs. PC commercials which helped increase the fanboy/girl attitude of Apple consumers .
8. Stand for something
• Communicate clearly and regularly with consumers about your company’s values.
• They may enjoy your products, but the most loyal customers love what you stand for and how you can help them; make it easy for them to see what you’re about.
9. Devil’s advocate
• Marketers can learn an important lesson from this ancient Catholic tradition: research shows that when groups of people have their ideas questioned by a "devil's advocate", they actually increase their confidence in their original stance.
10. Keep ’em on Their Toes
• While customers value consistency, they also like surprises.
• Surprise your customers with unexpected treats and you’ll build brand loyalty.
• Utilize this process of "surprise reciprocity" by creating small WOWs that customers don't expect. Remember, it doesn't have to be a costly endeavor, it really is the thought that counts.
WHY STUDY CONSUMER BEHAVIOR?
• Marketing applications of consumer behavior:
– Market segmentation
– Target market selection
– Positioning
– Product or service decisions
– Pricing decisions
– Distribution decisions
– Promotion decisions
CONSUMER PERSONALITY
• Consumers are complicated.
• If they buys based on only one criteria, it is easier to convince others too.
• Then no need of ad campaigns and large advertising budget.
• Unfortunately consumers are influenced by different stimuli.
• One major influence factor is Consumer Personality.
THE BUYING ROLES
5 roles people might play in a buying decision process
1. Initiator : who first gives the idea of buying the product or service
2. Influencer :whose view or advice influences the decision
3. Decider :who decide on any component of buying decision
4. Buyer :who makes the actual purchase
5. User :who uses the product or service purchased.
CONSUMER BUYING DECISION PROCESS FIVE STAGE MODEL
I. Need recognition / Problem recognition
II. Information search
III. Evaluation of alternativesIV. Purchase decision
V. Post-purchase behavior.
I. NEED RECOGNITION / PROBLEM RECOGNITION
• Need happens when there is a lag between the consumer’s actual situation and the ideal and desired one.
• Recognition of the particular problem or need and here the buyer has a need to satisfy or a problem that needs solving, and this is the beginning of the buyer decision process.
II. INFORMATION SEARCH
• Once the need is identified, it’s time for the consumer to seek information about possible solutions to the problem.
• Then the consumer will seek to make his opinion to guide his choice and his decision-making process with:
• Internal information: this information is already present in the consumer’s memory. It comes from previous experiences he had with a product or brand and the opinion he may have of the brand.
• External information: This is information on a product or brand received from and obtained by friends or family, by reviews from other consumers or from the press, official business sources such as an advertising or a seller’s speech.
III. EVALUATION OF ALTERNATIVES
• Once the information collected, – the consumer will be able to evaluate the different alternatives that offer to him, – evaluate the most suitable to his needs.
IV. PURCHASE DECISION
• Now that the consumer has evaluated the different solutions and products available for respond to his need, he will be able to choose the product or brand that seems most appropriate to his needs.
Then proceed to the actual purchase itself.
V. POST PURCHASE BEHAVIOR
• Once the product is purchased and used, the consumer will evaluate the adequacy with his original needs (those who caused the buying behavior).
• Ex: whether he has made the right choice in buying this product or not. He will feel either a sense of satisfaction for the product (and the choice). Or, on the contrary, a disappointment if the product has fallen far short of expectations.
THE FACTORS INFLUENCING CONSUMER BUYING BEHAVIOR
1. CULTURAL factors: a consumer’s culture, subculture and social class. These factors are often inherent in our values and decision processes.
2. SOCIAL factors: groups (reference groups, aspirational groups and member groups), family, roles and status. This explains the outside influences of others on our purchase decisions either directly or indirectly.
3. PERSONAL factors: variables as age and lifecycle stage, occupation, economic circumstances, lifestyle (activities, interests, opinions and demographics), personality and self concept. These may explain why our preferences often change as our `situation' changes.
4. PSCHOLOGICAL factors: affecting our purchase decision include motivation (Maslow's hierarchy of needs), perception, learning, beliefs and attitudes.
TYPES OF BUYING DECISION BEHAVIOR
• Need happens when there is a lag between the consumer’s actual situation and the ideal and desired one.
• Recognition of the particular problem or need and here the buyer has a need to satisfy or a problem that needs solving, and this is the beginning of the buyer decision process.
II. INFORMATION SEARCH
• Once the need is identified, it’s time for the consumer to seek information about possible solutions to the problem.
• Then the consumer will seek to make his opinion to guide his choice and his decision-making process with:
• Internal information: this information is already present in the consumer’s memory. It comes from previous experiences he had with a product or brand and the opinion he may have of the brand.
• External information: This is information on a product or brand received from and obtained by friends or family, by reviews from other consumers or from the press, official business sources such as an advertising or a seller’s speech.
III. EVALUATION OF ALTERNATIVES
• Once the information collected, – the consumer will be able to evaluate the different alternatives that offer to him, – evaluate the most suitable to his needs.
IV. PURCHASE DECISION
• Now that the consumer has evaluated the different solutions and products available for respond to his need, he will be able to choose the product or brand that seems most appropriate to his needs.
Then proceed to the actual purchase itself.
V. POST PURCHASE BEHAVIOR
• Once the product is purchased and used, the consumer will evaluate the adequacy with his original needs (those who caused the buying behavior).
• Ex: whether he has made the right choice in buying this product or not. He will feel either a sense of satisfaction for the product (and the choice). Or, on the contrary, a disappointment if the product has fallen far short of expectations.
THE FACTORS INFLUENCING CONSUMER BUYING BEHAVIOR
1. CULTURAL factors: a consumer’s culture, subculture and social class. These factors are often inherent in our values and decision processes.
2. SOCIAL factors: groups (reference groups, aspirational groups and member groups), family, roles and status. This explains the outside influences of others on our purchase decisions either directly or indirectly.
3. PERSONAL factors: variables as age and lifecycle stage, occupation, economic circumstances, lifestyle (activities, interests, opinions and demographics), personality and self concept. These may explain why our preferences often change as our `situation' changes.
4. PSCHOLOGICAL factors: affecting our purchase decision include motivation (Maslow's hierarchy of needs), perception, learning, beliefs and attitudes.
TYPES OF BUYING DECISION BEHAVIOR
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