Consumer Behaviour

There has been a lot of speculation (again) recently about General Motors (GM) filing for chapter 11.  Reports suggest that the company would use this form of bankruptcy protection so that it could liquidate undesirable assets and renegotiate contracts.

Of course, these are all things it has been trying to do over the past few months, a period during which it has received substantial funding from the US government ($17.4 billion was divided between them and Chrysler).  It’s worth noting that, according to some reports, only around 10% of companies manage to reorganise successfully.

Naturally, my interest is the potential reaction of consumers if GM did file for Chapter 11 rather than the politics of bailing out companies.  That said, I will add that giving a huge amount of money to a group of people who have demonstrated that they can’t run a business well seems a little, how shall I put it, optimistic. 

I suspect that the consumer reaction to a GM in Chapter 11 will depend primarily on the dealership network to maintain consumer confidence.  If they can reassure customers that they will be able to provide the long term after-sales support that they will need then it need not be a complete disaster.

However, the perceived risk of buying a GM car will increase for consumers.  The media stories surrounding a Chapter 11 filing are likely to focus on the negative elements of the company’s past; cars that were recalled, cars that didn’t sell well, pr0ducts that were out of touch with changing market tastes, and the strength of competitors.  Such reminders are not conducive to driving sales up, and are likely simply to increase anxiety about buying the brand.  The unconscious mind will be asking itself, “Having heard all that, if I bought one now and it went wrong, how stupid would I feel?”

Experience from the UK of Rover going under gives some clues about what consumers might expect: bargain prices, problems getting spare parts and mediocre cars.  To be fair the cars were mediocre before the company ran into problems, hence the difficulty getting people to buy them at profitable prices and the spiral into loss!

Chapter 11 will mark a significant step towards the end of General Motors.  Consumers will have good reason to be wary of buying and no shortage of reminders (through the media and discussions with friends) that buying a GM car is an unjustifiable risk; GM car dealers will be the last line of defence.

Philip Graves

Philip Graves consumer behaviour bankruptcy, Chapter 11, consumer behaviour, General Motors, GM, manufacturers

Today I’ve been writing a lengthy article on consumer behaviour for an international magazine.  Whilst I was working on it I remembered a video I posted a long time ago over on my Vox blog (and yes, a new post there is long overdue).

Anyway, I thought I’d share the video here because it’s both entertaining and quite informative. 

Bird & Fortune are a pair of satirical comedians who regularly draw attention to the silliness of politics and the world.  Here they talk about the subprime crisis that seems to have triggered the recession we’re ‘enjoying’ globally at the moment.

The point I was making in my article is that consumer behaviour is also all a matter of sentiment.  People can be in exactly the same financial position and with the same inability to forecast the future accurately as they were eighteen months ago, but they behave very differently as consumers.

The fear of what the future might hold increases unconscious sensitivity to future losses and that has big repercussions for what consumers will and won’t do (points I’ll need to save for the magazine article).

Philip Graves

Philip Graves consumer behaviour consumer behaviour, marketing communication, subprime crisis

I enjoy watching myself as a consumer, in that slightly schizophrenic way that I encourage everyone interested in understanding customers better to do.  If you have the right framework you can learn a lot about the way in which other people make decisions by watching how you make a decision – after all, you’re a person aren’t you?

The challenge is always to split out that part of you that consciously post-rationalises what you do in a totally bogus way.   If you can learn to tell yourself that, deep down, you’re smart, sexy, clever and incredibly good at parking a car, you can put your ego to one side for a few minutes and observe what you’re doing as a consumer. 

You’ll have a reasonable idea that you’re on the right track when you spot yourself doing things that are  impulsive, irrational, poorly judged and altogether a bit dumb.

Recently, I had to choose between two suppliers for a fairly major contract.  Both put in a huge amount of work to provide their quotes and I felt both would have been excellent solutions for my needs.  But I could only choose one.

So I thought I would give as considered a response as possible to the firm that I wasn’t choosing, in the hope it would help them.

I’ve included it below.

Thank you for visiting me yesterday and providing the above quote in such a timely fashion.

I’m writing to inform you that I have decided to use another company.  The decision was incredibly hard and made all the more difficult by the fact that the specifications suggested by the companies I spoke to differed substantially, making a simple price comparison impossible (not that it was ever solely a matter of price). 

In your position I would be keen to understand why I had not been chosen over a competitor.  In this case it was a matter of finding it almost impossible to make a choice, opting to speak to the firm that I had spoken to first to try and resolve the best route forward and, as a result of that conversation, opting to go with the person who was giving me advice at that time.   

During the conversation I was better able to understand the reasons for them recommending the unit they had (a slightly higher specification), was able to appreciate the benefit of features they suggested, and they agreed to add in an additional item.  I was happier with the idea of a wired system over a wireless one (given wireless problems we’ve experienced in the past), and they remembered from their visit that the necessary cabling could be routed quite easily. 

Of course these differences are changes that could easily be incorporated into your own quote. However, as a consumer there comes a point where the complexities involved risk one never making a decision, and at some point it becomes necessary to “jump in” even though you know that you don’t have perfect data.   

I was hugely impressed by your company’s professionalism and, as you’re no doubt aware from your commercial success, my selection of a competitor was no reflection on your approach.

Thank you again for supplying me with a quote

Philip Graves

Philip Graves consumer behaviour analysis, choice, consumer behaviour, why customers buy

One of the subjects that I think should be of interest to all consumer researchers is the law.

Not all that Jerome Vs Willensby in 1869 case law stuff, I can’t see much application for that, not studying the statute books either.  I’m talking about evidence, how it’s collected and how much weight can reasonably be attached to it.

Given their importance in the legal process, a lot of work has been done to examine the accuracy of eye-witness testimony.  It strikes me that if there were any question over people’s ability to accurately report on an event they witness involving someone else then similar problems may well exist when relying on a person’s ability to accurately report their own experiences.

In fact, given the role of the conscious mind as a post-rationalising device that has no direct access to the unconscious mechanisms that trigger our behaviour, there is reasonable argument to expect self-witnessing to be even less accurate.

So do these studies suggest eye-witnesses are reliable?

In a word, no.

One recent study for the journal Law and Human Behaviour found that false eye witness testimony contributed to more than three quarters of wrongful convictions (that were accurately resolved using DNA evidence).

A recently released study by psychologists at Iowa State University faked a crime in front a group of students and asked them to identify the perpetrator from photographs of five suspects, none of whom was the actual thief.  Just 16% of the 200 people interviewed said none of them was guilty.  Those who had picked rated their confidence in their selection as, on average, six out of ten.

When the witnesses were told that one of the five had confessed over 90% picked out one of the people from the line up and the average level of confidence increased from 6 to 8.5.  Remember, the thief wasn’t any of those pictured.

There are numerous theories about why these inaccuracies occur.  One study has found that  people focus so heavily on one dramatic or traumatic aspect of a scene (such as the gun in an armed raid) that they don’t really see much of anything else. 

Another has found that people have a very limited capacity for retaining information; as little as two pieces of information may be all that is retained from an event in the past.

From my own work, the nature of the questioning process is such that people can be unconsciously appealed to be helpful and to please the person asking the question, as a result they unwittingly (and equally unconsciously) prioritise trying to say something that will satisfy the interpersonal exchange that’s taking place at that moment over a ruthless reappraisal of the past.

This issue is just one of the reasons I’m incredibly wary of relying on consumers’ accounts of their consumer behaviour when I conduct research for clients.

My consumer behaviour company works on the premise that, when it comes to designing consumer research studies, it’s far better to assume customers can’t tell us what they think than to believe that they can or will.

Philip Graves

Philip Graves consumer behaviour, consumer research consumer behaviour, consumer research, eye witness, psychology

One of the challenges with studying consumer behaviour is that the behaviour itself is incontrovertible, but the interpretation of that behaviour is often much more open to debate: what caused what?  What can be inferred from what happened

Recently, when I casually commented on a reported change in consumer behaviour, the person I was speaking to got quite indignant.

You can read about what happened and what I learned in the process here (it’s a sneak preview of one of the articles that will be in my next Mindshop! e-Zine, out tomorrow).

And linking to it here gives those who do read it a chance to comment if they would like to – I’d love to hear your thoughts.

Philip Graves

Philip Graves consumer behaviour articles, consumer behaviour

Since we’ve been discussing stories with Kevin, I thought I’d share this one here.  Readers of my Mindshop! E-zine will see it when they receive the next edition (sorry for the duplication, but you can comment on it easily here).

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I sat looking across the desk at the man holding a set of white boards close to his chest.

“We’re really excited about this,” he said nodding confidently, whilst looking up at the rest of us with big eyes that said “please me”.

I could feel the energy in the room, the sense of anticipation, the others not aware and not affected by the incongruence between his tone and his body language.

I sat back with an impending sense of doom.

“We’re sure this is going to be so good for the brand.”  His statement did nothing to change my feelings, but the others were shifting on their seats with nervous excitement; they were trying to look composed but failing to carry it off.

“I’ll let Simon tell you a bit more about how we got here.”  I knew this wasn’t going to be a story about the car journey, although part of me wished it would be.  Rather this would be more nefarious razzle dazzle, more self-justification, more winding up the audience.  This little act was priming the pump.

I didn’t know at the time how an excited unconscious mind thinks differently; how much more likely it is to buy what’s in front of it.  I did know that the wool was being firmly pulled over the eyes of the audience and that whatever they were about to say “yes” to (and I was fairly sure that they would say yes to it) wasn’t going to be judged objectively.

Paul, the man with the boards containing his agency’s new campaign of magazine adverts, got ready to perform the big reveal.

The problem I had was that I had no objective basis with which to counter what was happening.  If I’d been able to point to the ads we were looking at and say, “Look, this won’t work because…” I would have felt much happier. 

I could either agree with everyone else or I could be the outsider, the lone voice sounding gloomy about the new advertising campaign.  The chances were that the advertising agency had used the old leave-it-as-late-as-possible technique, whereby the original launch has little chance of being met if they’re sent back to the drawing board. 

No one was going to thank me for being negative.  After all, weren’t we just expressing our opinions?  Was there really anything more to it than that?  I certainly couldn’t tell people what I know now: that their feelings were, at least in part, a by-product of their excitement and nothing to do with the adverts they were seeing.  They would have thought I was mad.

I opted for a non-committal but wimpy, “I’d like to think about it a bit more” and let the others revel in their pleasurable anticipation of higher sales that they expected but wouldn’t get.

Now I could take that advertising campaign apart very simply and very logically.  Now I understand how the unconscious mind processes an advert.  Now I understand the secret of what sells and what doesn’t.

If you want a more considered response to marketing material, whether it’s your own website or a new television advertising campaign I’d recommend you read The Secret of Selling: How to Sell to Your Customer’s Unconscious Mind.  Inside you won’t just find the mechanisms that influence how a potential customer perceives you or your product, you’ll also get a step-by-step guide to developing the right associations for your product or service, whatever you sell.

The Secret of Selling is available for a limited time at just £27.00, backed by a full 60 day money back guarantee; honestly, I’m really excited about it !

 Philip Graves

Philip Graves Advertising, selling Advertising, buying behaviour, influence, psychology, The Secret of Selling

I really appreciated all of the comments received in response to yesterday’s post and I wanted to pick up on one that, as a consumer behaviour expert, I found fascinating.  It also was one of the last comments posted so people scanning through what others have said wouldn’t have seen it.

Mark (MarketingScoops) said: “I had an interesting shopping experience today. I had no intention of shopping but I received a 40% off one item special on my blackberry. Once I was in the store, I entered the shopping mode and bought 3 things. The super special got me in the store and completely changed my mindset.”

This reveals a couple of very interesting issues.

1. It reinforces my point about a lot of consumer behaviour not being “need” based, but being triggered far less rationally and influenced much more indirectly.
2. It illustrates the route to understanding consumer behaviour: whilst there is no direct link between the adaptive unconscious mind and the conscious mind, an awareness that it is the former that directs the show enables you to become more aware of its involvement in your own behaviour.  By looking at our own behaviour dispassionately (rather than with the distorted bias of our own conscious delusions) we can start to see how we’ve acted unconsciously and then begin to trace what might have influenced us to do so.  In essence what we have to learn to do is stand back and observe ourselves.

The way to enhance this understanding further is to apply what’s been discovered through studies in social psychology and neuroscience, which often help to explain our seemingly random acts of consumerism.  And that’s the sort of thing I bring readers of my eZine (honestly, how can you resist signing up?!)  Of course, once you start to develop this skill you can apply it to what you see your own customers doing.

Philip Graves

Philip Graves consumer behaviour consumer behaviour, influence, neuroscience, psychology, why customers buy

You’d be hard pressed to find any marketing text book that doesn’t talk at some point about “consumer need”.

It’s a simple enough concept: the products that will do best are those that meet a requirement that someone has.

At the next level you may find there’s a discussion on the types of consumer need.  Broadly these break down into physical and emotional needs. 

So, by way of simplistic example, the former says that, because you’re cold you will buy a hat.  The latter that because you want to feel special you’ll buy an expensive hat. 

This is all fine up to a  point.  But I happen to think that most consumer behaviour is nothing to do with “need”.  This is a problem because the notion of consumer need suggests that, at some level, a consumer is aware of what it is they are getting as a result of acquiring the product, and in my experience that’s often not the case.

Have you ever noticed how much some people’s lives are taken up with shopping; for some people human behaviour is consumer behaviour, almost exclusively.  When they aren’t shopping, they’re thinking about shopping, or watching TV programmes surrounded by ads, or reading magazines that are promoting consumerism directly through their copy or indirectly through their adverts. 

And some people will talk about shopping for hours; granted they’re not talking about the physical act of buying, they’re talking about something they’re thinking about buying, or something they’ve bought, or what happened when they tried to buy something.

All of this is has precious little to do with how cold someone’s head is.

I suspect that we’re collectively so preoccupied with shopping because of how our brains work.  Studies show that the brain works by estimating risk and reward, and then sending out extra dopamine (the feel good factor) when a decision is proved correct.  This increases the strength of the the neural pathway, essentially increasing our perception that what we thought would happen did.

I won’t explore the many fascinating implications of this mechanisms now, but when it comes to shopping I suspect it’s so prevalent because it’s so predictably rewarding.

Most of the time when you go out to buy you successfully do so.  The process is completed and you now own something new.  Owning stuff feels nice.  In fact, studies like the one I talked about recently in my eZine (The Importance of Touch) show that we get very attached to things we hold very quickly.

In evolutionary terms it’s generally been advantageous for us to have stuff: stored provisions, items we can use as tools, things we can defend ourselves with, mechanisms for protecting ourselves from the elements and so on.  So our brains have evolved to reward us for having things.

Rarely is shopping disappointing or dissatisfying.  When it is we learn quickly to change our expectations or to avoid places that fail to satisfy, and we can quickly find substitutes.

In essence shopping is low risk, high reward behaviour, and our brains get a kick out of that.

Philip Graves
P.S. You can sign up for my eZine here.

Philip Graves consumer behaviour, consumer research analysis, articles, consumer behaviour, consumer research, psychology, why customers buy

It seems from many of your comments about focus groups that many of you have experienced some of the problems I mentioned in relation to asking consumers about their perceptions.

To be fair to focus groups I should point out that I was talking about research more generally. 

There’s little doubt in my mind that the focus group, per se, is far and away the most useless, unreliable, misleading and distorting ‘tool’ in the marketers armoury. 

Actually, I should qualify that a little.  A focus group in a viewing facility is the pinnacle of disastrous research techniques, but the focus group part of that is no small component.

I would really appreciate hearing more details from those of you who have had bad experiences with focus groups.  Please email me if you have any stories to share (and I’m happy to respect requests for confidentiality).

Back to the subject at hand…

Yes, perception is everything, but asking consumers about their perceptions is fraught with difficulty; on the other hand, understanding them is very important if you want to understand consumer behaviour.

So how do you understand what customers’ perceptions are?

It’s mostly about time.

One of the benefits of unconscious processing is how fast it is.  Whilst you’re wondering what you’re looking at, your unconscious has filtered 10 millions bits of data about your environment and caused you to respond in the way it thinks best – the way that will keep you safest, usually.

So when it comes to establised brand perceptions what you need to look for are quick associations that a customer makes with a brand or product.  For example, when the opportunity occurs naturally (or apparently naturally) for them to talk about a brand, the more fluently they talk and the more they have to say – in a sense, the more they are reeling off something that’s clearly established and familiar to them – the more deep-rooted what they have to say is.

Similarly, when someone engages with a product (for example in a store), you can see how engaged with it they are, and how readily they select it over the alternatives available. 

You might think this is a tricky skill to acquire, but if I asked you to watch some people meeting in a room do you think you would be able to spot who already liked who?  Assuming they weren’t aware you were watching them and had no reason to mask their behaviour, my guess is you would get it right most of the time.  Trained observers can usually tell even when people are trying to conceal their connections.

In talking to people, the biggest clues to brand perceptions come from inconsistencies.  When what someone says doesn’t match all their experiences or what they do it is a significant clue that confirmation bias is turned up high.

When someone is naturally eulogising about a brand (i.e. not in response to a research-style question) the natural thing to do is to empathise with them and mirror their account with those of your own.  Instead, using a suitably gentle tone, explore the contradictions; “You must have had a few problems with them though, everyone does.”

Yes, this is a leading comment / question (the best ones usually are, but I’ll save that point for another time), but it allows you to find out whether this is a genuinely unblemished experience or a biased assessment.

In case you’re wondering, the most likely source of such biases are people’s first experiences with the brand concerned or what they were told by a friend that made them select it in the first place.

Philip Graves

Philip Graves consumer behaviour, consumer research consumer behaviour, consumer choice, influence, psychology, why customers buy

Having suggested that perception is far more important that the reality of experience in determining consumer behaviour, you might think that finding out how a consumer perceives your brand is a useful exercise.

And, of course, you’d be right.

You might suggest, therefore, that asking a sample of your target consumer audience or existing customers would be a smart think to do.

And you’d be a lot less right.  In fact, if you don’t mind me saying so, you’d be wrong.

There are a number of reasons for this.

Firstly, we aren’t always aware of our perceptions.  A lot of our reactions happen at an unconscious, emotional level.  We like to believe we’re wonderfully good at decoding this responses consciously and post-rationalising them accurately, but we really aren’t.  We just make it up and then convince ourselves that what we’ve just told ourselves is true.

This is what I call “the what we like to tell ourselves” error.

In general, we’ll tell ourselves that we’re smarter, sexier, funnier and all round better than we really are.  We’ll also tell ourselves that we’re not in the snare of any silly old brand, it’s just that we’ve happened to find their products are better suited to our needs.

Secondly is the problem of how we think our answer will be perceived by someone else; we’ve learned through the “mistakes” of childhood not to say what we’re thinking but screen it for social acceptability. 

Kids are wonderfully honest and direct: I remember my two-year-old son staring at a man in the doctor’s waiting room and asking very loudly, “Why has that man drawn all over himself?”  The tattooed man didn’t take exception and it was, I think, a very good question to ask (although not one I would except to get an accurate answer to from the chap himself!).  By the age of six my son has enough of a developed sense of social awareness not to ask that sort of question in public.

This filtering process becomes automatic and gives us the “what might they think if I told them” error.

Most people don’t want to be seen as being influenced by brands and advertising even when they’ve fallen for a brand hook, line and sinker.  Even when they are aware they’re very loyal to a brand they probably wouldn’t want to acknowledge the full extent of it’s impact on what they do (even if they are aware of it).

Last, but not least, the actual process of asking someone a question changes the way they think and, therefore, how they respond.  I won’t go into all the psychological nuances of this now, but suffice it to say there’s a reason that psychotherapy makes such extensive use of balanced questions to bring about change.

So, whilst customers’ perceptions are deeply significant in determining their behaviour, asking them about those perceptions isn’t likely to reveal the nature or extent of them reliably.

Next time, if you haven’t guessed already, I’ll tell you how you can understand this aspect of consumer behaviour better.

Philip Graves

Philip Graves consumer behaviour, consumer research analysis, articles, buying behaviour, consumer behaviour, consumer research, why customers buy