Question: My small business is doing OK, but not growing much. I think it would help if I knew more about what motivates people to buy a particular product or service. Why do people buy? What's the scoop?
Answer: Yes, there's some history here, and some recent research on "buy-ology." You may, or may not, like where it's going. Let's talk about this.
Here's a fun metaphor to start our discussion. Look at it this way. All of your prospective customers or clients are avid listeners of these two major radio stations: WII-FM, and MMFG-AM. The joke is: WII-FM stands for "What's In It-For Me," and MMFG-AM is "Make Me Feel Good-About Myself." A great deal of the purchase decision is driven by emotional needs, for example to feel important, fulfilled, attractive, or successful.
The "why people buy" question has been around quite a while. In 1957, journalist Vance Packard released a book called "The Hidden Persuaders." Although it was primarily about business and marketing, it had some origin in the 1956 U.S. presidential election when, for the first time, television ads were the dominant medium for both sides. Here's some perspective: back then, there were only three primary broadcast channels; reception was via an ugly metal antenna on the roof; and the typical TV had a grainy 18 inch black-and-white screen.
Packard's main point was that sinister and manipulative techniques, like subliminal advertising, were being brought into the marketplace. In his view these controlling tricks were driving and distorting how people made buying decisions. He was partly right. That was the beginning of an explosive 30 years of growth in how we were marketed to, by a flood of skilled and targeted advertising pitches. Later, during the golden age of television, an ad during a top-rated show on one of the big-three networks could reach 70 percent of the viewing audience.
A major marketing research firm, Yankelovich, recently estimated that today a person living in a typical American city is exposed to 5,000 advertising messages daily. We're all in sensory overload from every direction. Some recent examples: ads printed on tray tables in US Airways planes; floods of pop-up ads in websites; logo-heavy reusable shopping bags; and an avalanche of "product placement" exposures in television shows and movies. For fans of "Hawaii Five-O," you may wonder if it's an action show, or a Chevrolet advertisement.
If you're in small business, you're on both sides of this issue. It's important that you know how to effectively address your target customers. And you also need to be aware that as a consumer, you make buying decisions yourself, too.
Theories abound about just exactly how people make the decision to buy something. Most of these theories make a distinction between buying necessities (staple foods; basic clothing; laundry soap) and other less-necessary or discretionary buying decisions (dinner out; upscale jewelry; artwork).
Here are some dimensions and ideas about why people buy.
Price. The price of an item or service is important to nearly all buyers. Interesting situation: JC Penney recently converted to a new pricing strategy. Merchandise is marked at a "low everyday" price. Recent reports indicate that it is not working well. Price-oriented customers don't feel like they're getting a "deal" unless something is on sale. We're all conditioned to respond to those prominent "30 percent off" signs.
Status and image. Many purchases are made with a prod from the ego: flashy cars, high-end wristwatches, country-club memberships. Also, consider a lifestyle item, like a hybrid car, where a big component of the purchase is "What it says about me."
Convenience. Many goods and services are purchased because they offer high ease-of-use. Examples: a refrigerator icemaker; a weekly lawn-mowing service.
Loyalty. Certain purchases have a very high brand-loyalty element. Examples: Apple products; soft drinks; cosmetics.
Enjoyment, pleasure or entertainment. Most people buy, at least occasionally, something simply for fun. This could be a product like sports equipment, a spa visit, or tickets to a concert.
As with all else in business, things are changing as we speak. Two recent books make this very clear. In "Buy-ology" (2008) author Martin Lindstrom reports his findings after a three-year, seven-million-dollar "neuromarketing" study of consumer brain function. This involved brain scans of 2000 people. Check chapter summaries at martinlindstrom.com.
In "Why We Buy" (revised, 2009) Paco Underhill discusses his company's fascinating analyses of consumer behaviors under various conditions. The subtitle - The Science of Shopping - is accurate. There's a good summary at consulttci.com/Book_reviews/whywebuy.
In the final analysis, why people buy may be as complex and unknowable as why people fall in love.
To learn more about managing cash flow, and other small business matters, contact SCORE, "Counselors to America's Small Business." SCORE is a nonprofit nationwide organization with more than 13,000 volunteer business counselors who provide free, confidential business counseling and low-cost training workshops to small business owners. Call the local SCORE chapter at 360-685-4259 to schedule an appointment. For details about the organization,visit SCORE.org.
Ask SCORE is prepared for The Bellingham Herald by Bob Dahms, a business counselor with the Bellingham chapter of SCORE. Submit questions for this column to firstname.lastname@example.org.