Consumer Behavior

June 28, 2011 By 1 Comment

“You can’t always get what youwant, but if you try sometimes, well you might find you get what you need” – Rolling Stones

Let’s take a moment to boil down the study of the psychology behind consumer behavior into one simple concept – CHOICE.  When presented with a selection of number of possibilities, consumers select the option that most aligns with their preferences or needs.  The following four constructs impact consumer behavior:

  • The psychology of how the consumer feels emotionally about or connected to the product or how they can distinguish between competitive products
  • The environment in which the consumer engages the products (i.e. in person, on-line, alone or with trusted friends)
  • The depth of information the consumer has regarding the possible selections
  • The motivation of the consumer to make the selection relative to their investment in the need for the product

EMOTION – ENVIRONMENT- INFORMATION – MOTIVATION

Successful businesses use these 4 constructs of choice to influence the consumer in their behavior and design their marketing campaigns and strategies to connect on these levels.

Emotions drive decisions, and consumer behavior’s core motivator is emotion.   A strong positive emotional connection to a product provides excellent motivation to select that product again in the future.    A strong negative will likely impact future selection.    Whether it is in the packaging, the presentation, the delivery or the consumer experience, building the proper emotional response for the product will generate additional motivation for selection.

According to Jeff Rutowski in How your emotions drive buying decisions, “People buy to solve problems, alleviate concerns, and to eliminate fear. The underlying message to this is that people buy based on emotion and then justify their purchase with facts.”

Environment impacts consumer behavior as a secondary response to emotions.  A consumer’s cultural heritage, family history and friends influence the selection process.  If friends or family make certain choices, it is likely that the consumer will make similar choices.  This is why word of mouth advertising is so effective.  A friend has a strong emotional experience about a product, and tells a friend about this experience and thus provides environmental stimuli for that second friend to make a consumer decision.

Informed consumers are also more likely to make selection because consumers are able to focus less on the gathering of details, and more on the actual environment of selection.  Studies have shown that knowledgeable consumers are less likely to be constrained by price in their selection process (The Effect of Prior Knowledge on Price Acceptability and the Type of Information Examined – Rao & Sieben) Therefore, it is important to educate the consumer as what people know about  a selection outcome, or what people perceive they know about  the outcome determines how much they are willing to invest to ensure they reach the outcome.

Finally, a motivated consumer that has an invested need a particular outcome will more likely make a selection.   In Consumer Behavior, Wayne D. Hoyer & Deborah J. McInnis state that “…when consumers are highly motivated to achieve a goal, they are more likely to pay careful attention to it, think about it, attempt to understand or comprehend goal-relevant information, evaluate the information critically, and try to remember it for later use.”   In this aspect, motivation helps feed the information component of consumer behavior.  Someone who is motivated is more likely to seek out a certain outcome, while someone with less motivation may easily pass by a choice, even if they have a strong emotional connection to it.

In conclusion, an organization that understands the emotional needs and motivation of the consumer, relates to their environment, and provide a source of knowledge, builds a stronger relationship with their clients and influences decisions.  Through the evolution of technology and strategic media marketing, organizations can leverage this consumer behavior and achieve their organizational goals.

“Consumer behavior has changed and the business model has not changed.” – Rich Barton (former Microsoft executive and founder of online travel company Expedia)

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Change

June 14, 2011 By Leave a Comment

“There is nothing more difficult to take in hand, more perilous to conduct, or more uncertain in its success, than to take the lead in the introduction of a new order of things.” – Machiavelli (1532)

The above is not quite the most famous “end justifies the means” quote from the prolific Italian philosopher of the 16th century, but a quote nearly 500 years later that still rings true.   For something that happens every day, change is a very difficult concept for many to understand.  There seems to be this natural reflex against change that must be overcome in order to grow and evolve into something better than the previous state.  This process is scary, detested, and forbidding.

Yet, without change… growth stagnates and complacency exists, and thus change becomes a paradox, feared but good.

“There is nothing wrong with change, if it is in the right direction” – Winston Churchill

There are many challenges to change in the right direction and often come with trade-offs in an organization.  For example, a change towards better products and higher profits may impact the pace of delivery or the effectiveness of the workforce.  As a facilitator of change, it is necessary to step back and examine the impact of the change as a whole and allow for a more systemic adoption, rather just micro-effective outcomes.   Organizations that focus on the narrow impacts may not necessarily see the effects that change has on an unexamined area.  Failure to see these impacts cause resistance and fear which can erase all the desired benefits of such change.

So if the organization desires growth and the ability to implement good change it is imperative that the entire change initiative be examined and fully considered regardless of the change.  Not all changes must come with the scope size of restructuring, mergers, or fundamental philosophical revolution.  It can come in the small form of implementing new programs that can maximize the leverage of the business competitive advantage.

When change occurs in the “right direction”, it brings conviction to the organization.  Not only are the programs adopted, but also the philosophies of the business are realigned to take advantage of this new state, and the business evolves.   Quality and timely communication of the new philosophies are paramount to the success of the change, and the organization.   It is critical to explain to customers, both internal and external, the benefits of these changes and gain rapid adoption of the new philosophy.

In “Success Factors for Lasting Change”, Maya Townsend says:

“One of the most helpful ways to embed change into the fabric of the organization is to create goals that are specifically linked to the success of the change effort. These goals help personalize the change and make it clear to each individual how she or he contributes to helping the organization evolve. Ideally, the goals begin at the highest levels and link to organizational strategy. Then, they cascade down through every department to every individual so all employees can see how they help the organization achieve its strategies.”

While the above concepts may be a blueprint for the avoidance of change, that strategy will quickly leave a business behind its evolving competition.   Change moves quickly, and the pace of change is quickening ever still.  For example:

From 2008 to 2011, in only 3 years, the Global cultural adoption of Facebook has been astronomical. This nearly 2,700% growth in adoption of Facebook technology of the last 3 years has completely dictated a cultural change in how humans communicate.  In those same years, the numbers for iPhone adoption (73.7 million) and Twitter users (200 million) have grown equally as dramatically amplifying the impact of this change.

This change in communication is systemic.  Facebook, Twitter, and other “social media” may seem a bit scary for business at first.  It may even be something that requires significant consideration or has been considered but not quite on a systemic level.  There is no denying we have fundamentally changed our way of communicating, so it is only natural for business to evolve to philosophical embrace this change or face stagnation, or worse, being left behind.  The evidence of change is quite clear, and the time to act is now.  Embrace the change and thrive.

“It may be hard for an egg to turn into a bird: it would be a jolly sight harder for it to learn to fly while remaining an egg. We are like eggs at present. And you cannot go on indefinitely being just an ordinary, decent egg. We must be hatched or go bad.” – CS Lewis

 

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Once upon a time…

June 7, 2011 By Leave a Comment

A long time ago, in a not so far away land, businesses had limited options for marketing, and few provided instantaneous results.  Many of these options involved significant investments in time and energy, and were unfocused.     Direct mail campaigns blanketed suburbs with less than 2% response rates and coupons fell into the recycle bins.  On air advertisement was expensive and didn’t necessarily reach the right people.  Papering cars on parking lots contributed to the rubbish heap and rarely went on to be read.

Businesses still managed to generate new business from these methods, and after delighting customers, a secondary wave of marketing took place… word of mouth. This second wave didn’t involve the time, the effort, or the expense and was so much more effective in generating additional leads and business.  These new customers would themselves be delighted and tell even more friends and the cycle would continue.

Along came technology that provided the opportunity to combine traditional marketing with that second wave and provide instantaneous results.  This technology allowed for strategic marketing solutions to be implemented where a business can share their message with existing and prospective customers and also allow these customers to share via their own social networks.  No longer did the business have to wait for mail drops, phone book publishing dates, or flier cars.  No longer did they have to worry if their message was going to reach the right people.  These strategic marketing solutions built stronger relationships between businesses and their customers, and thus reach out to additional customers.

Small businesses rejoiced at having these strategic marketing options and saw their benefits beyond the old ways.  In fact, businesses who have adopted these strategic marketing options have learned a valuable lesson from their consumers.  According to The Faces of Social Media. Knowledge Networks and MediaPost Communications (December 2010), 82% of the United States’ population uses some form of social media and 15% of them (approximately 30 million 13-80 year olds) are more likely to buy brands that advertise with strategic media and 25% are more inclined to find out more about brands that advertise on strategic media.

The 2010 Social Media Marketing Industry Report showed that 73.8% of marketers who have been using strategic media for years report it has helped them close business (a 12% increase from 2009).  57.8% of small business owners also reported strategic media helping them close business.   These same small businesses were also more were more likely than others to report greater exposure with 89.2% reporting benefits. 

See the whole report: 2010 Social Media Marketing Report

The impact of strategic marketing solutions and social media technology is not a fairy tale.   By leveraging this technology, businesses can solidify existing and build new relationships with customers that have demonstrable positive benefit for their operations.    And that’s something that will make businesses grow happily ever after.

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Dream On

June 3, 2011 By Leave a Comment

A dream is your creative vision for your life in the future. You must break out of your current comfort zone and become comfortable with the unfamiliar and the unknown.
- Denis Waitley

The genesis of any small business began with a dream, a thought, a goal, a hope.  The dream evolved into a vision which when acted upon became a reality.  Over time, this reality became a comfort zone leaving business the choice of stagnation or leaping forward into unfamiliar experiences and unknown opportunities.

Small businesses that stagnate quite often fall into obscurity while those that break free of their comfort zones flourish.  It is a challenge for the small business owner to keep the dream fresh while leaping into the unknown.

One specific area where small businesses find comfort zones is in their marketing programs.  They buy advertisements in the yellow pages because “that’s what we do every year”.  They run the same promotions because “they’ve worked in the past”.  They send direct mail because “we can reach the most people that way”.

Many small business owners focus their energy on their operations, leaving the analysis of these marketing programs low on the priority list.  Few businesses know if they are reaching the right people, generating the best leads, or effectively communicating the brand.  They may not realize there are better alternatives than their existing programs.

Over the past few years, technology and consumer behavior have evolved to a new frontier allowing for new relationships between businesses and their clients.  Word of mouth advertising has always been one of the strongest forms of lead generations, and now social media tools have developed to facilitate this communication.  Instantaneously, people can share their experiences with their “friends” through such social media tools as Twitter, Facebook, LinkedIn and Yelp.  Now when someone has a great experience, their entire network learns about it almost as it happens.  This technology may not be in your small business comfort zone, but it is very likely that you utilize this technology in your personal communications.

In 2010, 73% of US companies of 100 employees or more used social media tools for marketing purposes and  that percentage is projected to grow an additional 10% in 2011, and another 10%  in 2012 (eMarketer, Nov 1, 2010).    Why are there such a high percentage of companies leveraging this technology?  Likely, they understand the high rates of adoption the general public has for this technology.   For example, on Twitter alone, the expected number of users are expected to double from 18 million users in 2009 to 46 million users  in 2012 (eMarketer, April 2010).  A recent study posted on Bloomberg shows that since November 2010, Twitter usages has gone from 8% of the US adult population, to 13% in only 6 months (Bloomberg, June 1, 2011).   The general public is adopting this technology at a staggering rate, and forward thinking businesses are dreaming of new ways to leverage this wave.

It may be time to take the leap to break free of your current marketing comfort zones and allow the dream to grow and flourish.  Considering the opportunities and advantages strategic social media marketing may offer, breaking out of the comfort zone and into the unknown may be easier than once thought.    Leverage this technology and dream on….

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