Consumer Behaviour

When it comes to understanding consumers it’s always important to consider the issues from a rational perspective, and then completely ignore what you conclude.

Why?

Because consumer behaviour isn’t, for the most part, rationally based.

Recently I happened across a great example.

The UK supermarket chain Waitrose has always operated at the higher end of the market, catering to customers who are willing to pay a little more for higher quality produce.  Waitrose’s marketing makes much of the fact that they source their products carefully; some of their packaging will state which farm meat has come from for instance.

With the economic downturn all of the supermarkets have been keen to communicate low price messages; which isn’t easy since most of them operated on a low price platform anyway.  Indeed, the big two supermarkets (Asda who are owned by Wal Mart) and Tesco frequently squeeze suppliers brutally hard in order to drive down prices.  With such large shares of the grocery market, an efficient supplier has to decide between saying goodbye to most of their profit, down-grading their product, or losing a large proportion of their sales in an instant.

With most suppliers already squeezed the supermarkets have created new products, sometimes positioned below their already lower-priced own-label offerings, to sell more cheaply.  Sometimes they create new brands for these products, and sometimes they package them as new own-brand offerings.

Waitrose introduced an ‘Essentials’ own-label range and it seemed to be selling well.

I looked at the pizzas.

The ‘Essentials’ pizzas were more expensive than the regular own-label equivalents!

Looking on the company’s website I also notice that, even when the per pizza price is lower, the price per kilogram is higher on their ‘budget’ pizzas.

But they still sell.

Because customers buy the concept.  If the first instance primes them to believe that the product is cheaper, and in particular if that first experience isn’t bad from a quality perspective, then future purchases are made as an emotional reaction: seeing an ‘Essentials’ product is an opportunity to make a worthy purchase – a purchase that feels like a good, money-saving decision in these difficult times.

Few people will check what the actual cost is or how it lines up against alternatives – let’s face it that would make shopping extremely time-consuming.  And so the company can make a greater profit from a lower-priced product!

And to add to their prize the supermarkets, having drawn people in with the promise of lower-priced options, have the opportunity to influence the customers visiting their stores.  Feeling good about the money they believe they’ve saved, some customers will indulge in small ways elsewhere in the store.

Multi-buys will feel like great value, but lead to more products being purchased and, once sitting their on the shelf, the likelihood of their being consumed is high.  Consumption increases because of the constant visual prompt and feeling that a plentiful supply is available. It may even lead to feeling that a similar quantity of purchase is required next time, even if the offer is no longer present.

I’m not suggesting that such practices are admirable, desirable or morally justifiable.  But they provide a useful insight into the workings of the consumer mind.

Philip Graves

P.S. If you want to learn more about consumer behaviour take a look at my eBook, The Secret of Selling: How to Sell to Your Customer’s Unconscious Mind.

Philip Graves consumer behaviour consumer behaviour, priming, psychology, why customers buy

Continuing from yesterday’s post it seems my customer satisfaction is developing into a series.  I really appreciate the questions and comments, I sense an eBook coming on!

Today’s gratitude is due to babysitting maestro Lisa McLellan.  You may wonder what link there could possibly be between someone who is so focused on children and babysitting, and a consumer behaviour expert.  Well, as Lisa’s comment demonstrates, there is a link if you open your mind to it.

Here’s what Lisa said:

“I have found myself giving different answers to basically the same question depending on the wording of the question. I have also found through babysitting children of all ages, that at a particular age, (usually younger children age 2-4)children will choose the last choice they are given when you ask a question giving them a few answers to choose from. For example, you ask, “How did you get that scratch, did you fall down, did you scratch it on the corner of the bookcase, or did the cat scratch you?” 99% of the time, the child will say the cat scratched them simply because it was the last option.”

The great thing about studying children as consumers or, as in this case, as “respondents”, is that they are susceptible to all the same unconscious influences that adults are, but are far less skilled at concealing how they’ve been influenced with conscious filtering. 

Part of the innocence of childhood is the absence of the capacity to process what you’re about to say in advance, to check for social acceptability and, just as critically, self-perception.  In other words, “Is it OK to express this to this group of people?” and, “How will I look to them if I do?”

We soon learn not to repeat the last thing someone says to us, and it’s good we do or we would be too easy to manipulate; but we don’t learn not to let the options determine how we reply. 

Let me ask you a question: “What will you do this weekend? Play with the kids, watch a movie, sit down and relax?”.

You may not answer any of those things – although there’s quite a high possibility that you’ll mention one.  But almost anyone answering will be talking about leisure activity of some kind.

But if I’d asked you: “What will you do this weekend?” Some domestic paperwork, a supermarket shop, cut the grass?” you would probably have talked about chores and duties first. 

Studies have shown that if you ask people “How happy are you?” you will get a totally different response from asking the question “How unhappy are you?”  And if you ask which of two divorcing parties should get custody of a child you will get a different answer than if you ask which of those two parties shouldn’t get custody.

For my dissertation at university I looked at schoolchildrens’ attitudes to statistics.  Following the accepted protocol I used a battery of attitudinal questions (you know the “strongly agree, agree, disagree, strongly disagree type). 

I discovered that even children as old as fifteen were influenced by the orientation of the statement (i.e. whether it was framed positively or negatively).

Another revealing element of human psychology you can see quite easily in young children is emotional misattribution.  In fact, it’s a great way to appreciate that we humans are emotional creatures who retrofit rational explanations after the fact.

A child between the ages of two and seven (and possibly beyond) will often make a totally incongruent responses like: “Shall we get ready for school?” “No, I hate school!” or “Are you going to eat your sandwiches?” “No, I can’t stand cheese!” when you know perfectly well that they have enjoyed their time at school each day for the past year, or that they eat cheese frequently without a fuss.

What they’re revealing is that something has made them feel bad and they are directing that feeling at whatever target seems to fit the circumstances.  This could be an argument with a sibling, tiredness, a lost toy, resentment at having been disciplined for something a few minutes earlier, or any of a thousand other things.  As adults we learn to pick a more fitting target so we don’t get ridiculed, and so that we get to express our bad feeling; but it’s frequently just as misdirected.

Similarly, a toy will lie untouched for a week.  But once one child has it their sibling wants it too; more than anything else in the world.  This is an example of so-called “mirror neurons” in action and reflects (no pun intended) how we can all react by wanting to copy what we see others doing.  Ever yawned because someone else has yawned even though you didn’t feel tired?

So children reveal a lot about what we all do.  If you’re interested in the consumer research process you would do well to observe their inconsistencies and the influence that environment, frame and question wording have on them.

Next time I’ll tell you how you can analyse customer satisfaction.

Philip Graves

Philip Graves consumer behaviour, consumer research consumer research, customer satisfaction, priming, psychology

I’d like to pick up on a long reply to yesterday’s post because I hope I can be more constructive than I was able to be yesterday.

Here’s is Pam’s reply to yesterday’s post:

It’s interesting to read how the rational and unconscious minds often pull us in opposite directions. Your point is well taken that people often think they want A but actually choose B because it fulfills an unconscious need, want or desire. It is good to bear this in mind.

If you are looking to invest your money though, at some point – unless you choose to navigate the investment world yourself – you will likely be forced to make a choice between various options and advisers available to you. In essence, you are trusting your future to advice of someone and their investing philosophy and strategy.

The question then becomes in whom do you trust and why do you trust them?

As you have been explaining so well in your blog, our buying decisions must fulfill some type of psychological need. In the case of investing, one must feel comfortable entrusting their life savings.

For some it is purely an emotional investment. They will invest with the person who makes them feel most comfortable or represents a philosophy they feel most comfortable with.

For others, such as myself, our comfort-zone is found by analyzing details and facts. Rod’s approach will likely not persuade the masses. Nor does he intend it to. It’s a targeted niche of investors to whom his strategy will appeal. He knows and understands the demographics of those whom he is targeting.

I have seen first-hand the results Rod’s methods of investing. The process through which he takes his clients is thorough, rigorous and intense. I can speak to this through personal experience as I am one of his numerous clients. And yes, even I had to go through the same battery of tools he uses to devise a plan tailored and targeted specifically to my risk tolerance and time horizon – which I might add is different than the risk tolerance of us as a couple. I would be remiss if I didn’t add that while the market has taken a hit in recent months, my portfolio has weathered the storm quite nicely given the current economic conditions.

Everyone has to find their own comfort level – after all its YOUR money and YOUR future that you are banking on. While past performance is not a predictor of future earnings or performance, I know where my comfort-level is an I’m very happy with the results I’ve achieved through Rod’s methodology and strategic investing.

Thanks for your time and consideration.

Respectfully,

Pam
Well the first thing I’d like to say is that I’m sorry if Pam took it as an indirect attack on her and Rod’s business, it certainly wasn’t intended to be.

Secondly, Pam’s reply didn’d address the key point of the research I was reporting: it was investment advisers whose judgment was influenced (primed) by what they had just read, although no doubt consumers are susceptible to being primed in the same way.

So how could someone in the investment business use research like that which I referenced, which opens a veritable can of worms regarding the veracity of investment advice?

From the point of view of the investment advice they offer, other research on subliminal influence and priming shows that its effects are reduced, or removed altogether, where people are aware that something could prime them.  So, provided Rod recognises that he could be unconsciously primed to give different advice on the basis of what they read and hear, they are somewhat less likely to do so.

[Incidentally, I'm certain that none of the very rational and analytical investment advisers and accountants that took part in the research believed their advice was the by-product of something they'd just read.  This isn't a reflection on the individual, it's a reflection of how our brains work.]

Perhaps more importantly this information is an opportunity for them to differentiate from their competitors.  In their position this is exactly the sort of information I would communicate to potential clients, along with an overview of the systems in place to make the advice offered as rational and robust as possible (something that seems to be a real strength of theirs).

Rest assured, there is nothing like providing a genuine source of anxiety in your consumer’s mind regarding the risk of using a competitor, for that competitor to seem far less attractive.  Handled the wrong way knocking the competition can be alienating, but when you have scientific studies to quote it’s not you that’s doing the knocking, it’s implicit (or explicit if you point out that “very few other investment specialists are aware of the fact that…”).

I hope that this makes for a more constructive post. 

Philip Graves

Philip Graves consumer behaviour, selling Add new tag, analysis, consumer behaviour, marketing communication, priming, psychology

Perhaps some of the most interesting blog debate I’ve read recently has been on Rod’s Personal Investment Strategies blog. 

It’s been a while since I did any consumer behaviour research with financial institutions, but in many ways my journey into consumer behaviour and away from traditional consumer research began during a consumer focus group about pension choice, back in the 1990s. 

It was the fourth long and tedious group discussion with people who were considering investing in a pension scheme, during which they told me how they wanted independent advice, a range of funds and a provider with good financial security.  At the end, after everyone was getting up to go, one of the group asked another, who had been a little more vociferous than the rest, where he was planning to get his pension.  The reply led to several of the group soliciting the details of someone who I recognised was an ‘industrial’ insurance salesman (i.e. not independent).  What’s more, they didn’t ask who he represented, how financially secure his company was or how many funds he offered.

I realised that I was going away to write my report on what they’d all said; meanwhile they were all about go and do something entirely different.

I’m aware of studies that have found people tend to like stocks that have readable names (as opposed to abstract or technical-sounding ones), and that people tend to select things in general that begin with the same first letter as their own name. 

These reflect the way the unconscious mind works, by generating a feeling based on familiarity, which is then consciously de-coded (erroneously) as being a ‘good’ choice.

Last week another study shed light on the power of the unconscious mind’s influence in this apparently rational world: a study conducted by the University of Haifa found that the investment selections of a group of investment advisers and accountants  was strongly influenced by what type of article they were given to read before making a selection.

Those who were given an article on someone who took big risks and was successful, rated a stock they were shown as being more attractive (more valuable for investment) than those who were shown the same stock after reading an article about someone who had been successful after avoiding a risky decision.

All the participants gave their assessment of the fund on the basis of the same financial report.

So it seems an investment advisers advice might have just as much to do with what he’s read that morning in the paper, or a story he has heard from someone else, as it does a ‘rational’ assessment of the data for that company.

Studies like these on the power of priming don’t make for particularly comfortable reading for anyone who likes to believe they’re balanced, rational and analytically-minded.  However, understanding the way our brains work is critical to understanding our customers’ behaviour.

Philip Graves

Source: University of Haifa (2009, April 28). Reading Reports Involving Risk-taking Affects Financial Decision Making. ScienceDaily.

Philip Graves consumer behaviour, selling analysis, consumer behaviour, investments, priming, psychology