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Strategy

Consumer Behaviour Theories Explained

17 February 2020
A woman deciding which pineapple to buy

On a trip to Las Vegas in 2018, I discovered that I love the game craps.

For those who haven’t played craps, here’s how it works. A person rolls two dice. If it lands on seven or eleven, you win. If, for example, you roll a four, you then need to roll four again before getting a seven, or else you lose. 

What’s great about it is that unlike roulette or blackjack, you can bet small amounts yet stay in the game for quite a long time. In the end, you’ll probably lose, but the thrill is in staying in the game for just one more round *. 

* Added to the fact that drinks are free as long as you tip a dollar or so – what a city!

Which is where craps and marketing share a similarity. In the end, no-one really “wins”, but that doesn’t mean we shouldn’t try to keep the game going for the hell of it. Now, this might be seen as a little negative, nay even defeatist, but in the end, the best we can hope for is keeping the magic alive for a few more financial years.

“But what about Coke/Apple/Google/Tax-Dodger Inc.?”

Firstly, stop. Just, stop comparing every company to these monoliths. We can learn far more from your mate’s step-dad’s carpet cleaning business than we can from Apple, frankly because, even if you’re a company with a million quid turnover, you have more in common with your mate’s step-dad than Tim Cook et al. 

Secondly, they’re doing precisely the same thing we are, just over a longer time frame. Think of us as the gnats and them as the humans. To us, their lifespan and reach seem infinite, but in reality, it’s just a matter of perspective. Bottom line: is Google going to outlive the heat death of the universe? No. Which means they’re in the same situation as we are.

So what’s the point of this story I hear you ask? 

The point is that brands and products will always come and go like the tides, but the one thing that never truly changes is behaviour. By proxy, saying that consumer behaviour is “changing” is to misunderstand it altogether. From here on out, any time you see or hear someone claim that behaviour has changed, remember nothing if not this: they are wrong.

Well, sort of. 

In the same way that brands come and go over long periods, so too can certain behaviours. However, the crucial difference is that the most successful brands have been built up over several decades at most. In contrast, human behaviour is rooted in an evolutionary process that has taken millions of years to develop. Anybody claiming that something as asinine as TikTok or VR can change human behaviour is an imbecile. What’s worse, the insurgence of misinformation on the topic has grown in the past few years as people scramble to explain what’s happening to their industries. 

A graph showing the number of articles published on “changing consumer behaviour” since June 2016 (Ahrefs).

This isn’t to say that approaching the topic isn’t tricky. Stating that behaviour has changed is an easy trap to get drawn into whenever you notice your consumers doing something different. In this case, it is the product or environment that has changed, which is a critical distinction. 

Herein lies the double-edged sword of trying to understand consumer behaviour. On the one hand, if you can get a grasp on what your consumers need, then you can create a seamless journey from awareness to purchase, as the behaviour is not going to change in our lifetime. Unfortunately, the catch is that consumer behaviour is difficult to understand, and even a mild alteration to an innumerous array of stimuli can throw the whole process off course. 

Introduction

Derived from psychological models of general human behaviour and a plethora of other disciplines, consumer behaviour emerged shortly after the Second World War as marketing shifted away from its reliance on economic theory and began to forge its own path. Rather than viewing the market as a single entity, a greater focus was placed on the role of the individual consumer, and thus marketers needed to be able to build an understanding of how each one thought, acted, and – most crucially – purchased.

However, despite a concerted effort to turn it into a more scientific pursuit, it has often become a by-word in ham-fisted explanations of things we aren’t sure about. Product sales down? Must be a change in consumer behaviour. Are users not converting on your site? Must be down to a quirk in consumer behaviour. The company going out of business? Not our fault mate, consu…you get the idea.

In the same way that people on LinkedIn post about blockchain without knowing what it is, people often reference consumer behaviour when they want to seem like they know what they’re talking about*. 

Not knowing about consumer behaviour is no crime, but being a charlatan certainly ought to be. The thing is, consumer behaviour can be advantageous even if you only know a few guiding principles. Having this understanding can help you get into the habit of breaking down purchase journeys into greater detail and give you the tools to understand not only who your customers are but why they act as they do.

In this article, we’ll take you through the reasons people purchase in the first place, why the purchase process might change, and how brands can build loyalty to encourage repeat purchases.

*Yes I do it too.

Factors Influencing Consumer Behaviour

When a person decides to make a purchase, whether it be a car, a cake, or a controlling stake in a digital behemoth, several factors will come into play. The main factors that influence a purchase are as follows:

  • Mode of initiation
  • Efficacy of communication
  • Brand perception
  • Time constraints
  • Financial limitations
  • Social norms
  • Purchase motivation

It’s important to remember that this list isn’t exhaustive and that psychologists and marketers alike are continually tweaking and adding to lists like this*. Often the changes may be to split one factor into two to recognise variance in this particular field, or sometimes lists may be condensed to make them easier to understand. 

*Sometimes they just do this for the hell of it without any real academic or practical foundation to do so, but as long as you keep these and other similar reasons from other resources in mind, you’ll be fine.

Furthermore, while you should always have these topics in mind when trying to get into the head of your customers, not all of them will be relevant all of the time. For example, social conventions may play a significant role in deciding certain purchases (e.g. buying plane tickets online for a family holiday). Still, in other scenarios, this factor may have little to no bearing on the purchase as the value of the product isn’t rooted in this particular attribute (e.g. a new pack of socks from an online retailer).

Now we’ll delve into a bit more detail on each and give examples of how this might affect your business.

Mode of initiation

This refers to how someone becomes motivated to make a purchase. The initiation can come from a few different sources. Firstly, it can come from the individual (someone realising they are hungry), another person (being asked by somebody else if they are hungry) or from external stimuli and media (a display ad for a food delivery service).

The mode of initiation is essential, as self-initiation before a purchase will have a different effect to initiation from an advertisement. How these effects differ will relate to the perception of the brand itself, with a brand with higher equity in the eyes of the individual more likely to have an impact in ad form than an unknown brand. 

Concerning online paid advertising, this is an essential factor to consider. If you are promoting a new product or service, you will be better served to target people who have already realised they would like to make a purchase (i.e. with greater purchase intent) than those who do not. In this regard, PPC would give more fruitful returns than organic social.

Efficacy of communication

While an ad may initiate a purchase decision, the quality of the ad, both in terms of implicit and explicit value, will have a significant bearing on whether or not a purchase is made. The ad is intrinsically linked to a brand, meaning that even if there is a strong brand perception in the mind of the consumer, an inferior ad may quash any thoughts of making a purchase. 

For example, the activist group Stop Funding Hate highlights brands which use questionable platforms for their ads. Looking at their social posts, you can see that consumers regularly question the actions of brands they are using and even declare they will stop using their services altogether.

Related to this, the efficacy of communication of the product or service offering also refers to the medium of communication. A person may have a positive brand perception of Co-op but may deem it inappropriate for them to advertise their funeral services on Twitter. Considering where consumers want and expect to see ads is essential, as all too often, marketers are keen to use the tools they like best even when they aren’t appropriate. Similarly, different channels will have differing levels of efficacy dependent on a target audience. 

Imagine that KFC wants to run a new promotion. However, their consumer research has shown that the best targets for the campaign are men between 18 and 45 – a sizable audience with a lot of natural variation. To solve this issue, they look at the mediums the audiences typically consume ads, and it is found that the older men are more likely to be persuaded by OOH ads and that the younger men more likely influenced by organic social posts. In such a scenario, finding the right way to deliver is crucial to the outcome.

Brand perception

Pre-purchase knowledge is crucial as factors such as brand perception can make or break a purchase before the consumer even arrives at the initiation phase. If a consumer has a negative impression of your brand, the decision will be over before additional factors like quality and price are even taken into account.

When using any digital medium for marketing communications, there is no reason that traditional methods of brand measurement cannot be employed. Byron Sharp asserts that the most effective ways to increase a consumer’s purchase intent towards your product is to have them recall said product. 

The advice on determining brand equity makes no mention of the medium of advertising, so marketers must be more willing to stop the chase for conversions. Getting a consumer to convert may mean a sale, but does very little for brand perception, and the result may be that consumers never purchase again, which is hardly a sustainable model.

In the long term, brand building yields far better returns than sales promotions, as demonstrated in the seminal work of Field and Benet. In their 2003 presentation “The Long And The Short Of It”, they outlined the differing returns from sales and brand building activity, which reinforces that merely making a consumer aware of your brand is a massive part of the process.

Field and Benet’s graph on the effect of multiple exposures to a brand.

Time constraints

Extending beyond supply chain issues, how readily available the product is, and how it is delivered can be as crucial as the product itself. In the same way, the time constraints related to the product’s fundamental purpose will also be a factor. This is due to the way the purchase process has changed because of technology. 

Asos has been around for over ten years, and they managed to disrupt the online clothing market with their offering of next day delivery, setting the bar high for other online retailers. However, back in 2010, £10 a year for free delivery seemed quite pricey, indicating how such time perceptions can often only change over time, with consumers now more willing to settle on Asos’ limited product portfolio as they prioritise convenience over quality. 

The best example comes from the internet’s most significant retailer Amazon. Ask many people what they dislike about Amazon and their list of grievances will be as lengthy as the day is long. But, if you ask if they still use Amazon, and the answer will invariably be yes. In a list of the ten most-liked and loathed brands in 2018, Amazon was the only one to feature in both lists, highlighting how consumers are wary of their practices but ultimately won over by their offering.

The point is that their delivery and usability are so effective and universally understood that people will use them in spite of their issues. The speed of delivery is now treated as part of the product itself, and longer delivery time is construed on a similar footing to unavailability. In this sense, brands like Amazon and Asos have been able to surge ahead of competitors by having their products delivered in less than 24 hours. 

Financial Limitations

With many purchase decisions, all it takes is one factor to be unaligned, and the whole house of cards comes tumbling down. In many cases, price is where the process comes unstuck. This is partly because the cost of a product has so many subfactors, including price comparison to other products, personal financial solvency, long-term financial goals and potential price changes, to name just a few.

Concerning digital marketing efforts, consumers have been aided by the fact that price comparison is easier than ever before, as they can either make the comparisons themselves or even use price comparison sites to find the best deal. Despite changes in the mechanisms for price evaluation, the fundamental model remains similar today to that proposed in 1994 by Tung-Zong Chang and Albert Wildt:

Tung-Zong Chang and Albert Wildt's model of mechanisms of price evaluation

For the most part, the process follows these steps:

  • Product attribute information is considered to give a “perceived quality”
    • This measure is often intangible and will depend on preset opinions/beliefs (e.g. a plane ticket may be considered more valuable to someone who loves to travel)
  • Price of the item is compared to the costs of other similar products to determine “perceived price”
    • This can be done with prior knowledge of different prices or by making comparisons there and then (e.g. price comparison site)
  • Perceived quality is then weighed against the perceived value
  • Purchase intention is then formed

Essentially, this is a long-winded way of saying that people consider price and quality when choosing a product, which might sound like a really obvious thing to say. However, when you consider some of the more outrageous products released in the past, it’s’s fair to say that this logic gets overlooked a lot of the time.

What’s more, it reminds us that pricing is a part of the marketing process, and deciding how a product is priced shouldn’t be in the hands of the product development team alone. Pricing is actually part of the marketing mix – one of the most fundamental models in all of marketing theory, indicating that marketers, being close to the market and all, must have an active say in how things are priced in relation to competitors. 

And here I was thinking marketing was making infographics with out-of-date stats and being woke about mental health on social media!

Social norms

Social norms are often more of a factor when purchasing with other people present (i.e. in a physical location). Still, the overbearing nature of societal expectations means that such pressures will bleed into a decision-making process even when one is alone. A consumer may like a product, and all other factors could align; however, it is deemed to be undesirable by their social circle, they may choose not to purchase.

For this reason, marketers must be aware of how social norms influence purchase decisions. Many already do, exploiting the impressionable tendencies of some people by using celebrity promotion or even an odious influencer or two to hawk their product and encourage particular trends. The extent to which this is done is debated well beyond marketing circles as the effect on self-esteem, and societal perceptions are warped.

Less malevolent marketing tactics are regularly employed by digital marketers to take advantage of this factor. For example, an email campaign from a news service could attempt to highlight issues of poverty for young people by providing details of an offline support network. Such a campaign would help position the brand as a trustworthy and useful service without pulling on the insecurities felt by many people. 

Consumer Buying Behaviour

F*** you, that’s my name!” Alec Baldwin in Glengarry Glen Ross (1992).

Alec Baldwin’s’s short-tempered response to being asked his name should serve as a stark reminder that for all the graphs of brand love, influencer outreach and consumer listening, sales are everything. Speaking to a bedraggled group of salesmen, Baldwin incisively explains why his name doesn’t matter before surmising the principles of the sales funnel in a short rant:

“Attention, interest, decision, action. 

Attention — do I have your attention? Interest — are you interested? I know you are because it’s f*** or walk. You close, or you hit the bricks! Decision — have you made your decision for Christ?!! And action. A-I-D-A; get out there!!”

Gratuitous language aside, this summation drills down to the heart of the issue; for all the complexity in arriving at each stage, the decision can be over in a flash, which is why it’s been so crucial to get your marketing right every step of the way. 

However, the source of said rant – a salesman – highlights the fact that the sales funnel is constructed from the viewpoint of the seller rather than the consumer, and as tempting as it is to be drawn in by the gusto of people like Baldwin, a different approach is required to understand the consumer.

Typically, every purchase will follow these stages as defined in 2010 by Swati Kholsa:

  • Problem identification
  • Information search
  • Pre-purchase evaluation 
  • Purchase
  • Post-purchase evaluation

Admittedly, this list isn’t quite as compelling as the one reeled off by Alec Baldwin, and the fact its acronym spells PIPPP probably doesn’t help either. Nonetheless, it covers the perspective of the consumer much more comprehensively and allows us to see the behaviour as an evolving state rather than distinct stages characterised by actions. 

Problem identification

The main issue with the sales funnel is that applying its language to consumer behaviour doesn’t work, yet it shapes the way ads and campaigns are formed. Using the phrase “”awareness”” traps many marketers into thinking that in this stage of the funnel, merely making consumers aware of their product is enough. However, the purchase process model reinforces the fact that the decision may not be derived from an ad, but rather self-identification of a need.

While this problem may be provoked by an ad (e.g. a paid social promotion for a betting site), it is naive to think that all purchase decisions will begin this way. Furthermore, problem identification is far from a simple process, as it may occur over a long period (e.g. buying plane tickets) or the consumer may be unable to unpick the nature of their problem (e.g. wanting a new website for a company). Such factors should play a significant role in determining consumer profiling, and as previously mentioned, this may mean that immediate conversions are an unrealistic aim. 

Information Search

Once the problem has been identified, consumers can move onto the search for information. This may be a reasonably straightforward process, either by thinking of instances in which they’ve seen a solution advertised or by asking other people. 

However, marketers should primarily concern themselves with the modern method of searching for information and how they can reach the consumer at this point through SEO or PPC. It is worth noting that some consumers in this phase may come across the solution through other channels, but as this behaviour is less predictable, it is more prudent to focus on search.

With the SEO race more competitive than ever, the best means of reaching consumers is to consider the stages of the aforementioned sales funnel to figure out the types of questions consumers may be asking. Having an informative section on your site describing how the product is used, its benefits and any other relevant information may seem like a simplistic way of approaching the problem. Still, it is staggering how few SME brands actually do it. 

Pre-purchase evaluation

Once the vital information on the product has been ascertained, the pre-purchase evaluation begins. This may come in the form of reading product reviews, comparing to other products (potentially through comparison sites) or considering personal factors such as cost. In this phase, it is tempting to “honeypot” different options for consumers by providing them with alternatives. However, the thinking behind this is flawed, and marketers should be wary that too much choice can dissuade a consumer from making a purchase.

A famous experiment from 2000 proved that offering fewer products will lead to more purchases rather than less. Two tables were set out at a food market in the USA, one with six types of jam and the other with 24. The table with fewer jams made a higher profit, as consumers were frozen in the face of the quantity of choice from the other table. This is a particularly prudent point for large-scale retailers, as consumers should be given a chance to evaluate a product during this phase, but only from the perspective of the product itself rather than a round-the-houses means of showing lots of alternatives.

Purchase

The purchase phase is the one which most closely relates to the sales funnel model, with the sole action in this part of the process being the purchase itself. As with the previous phase, this part of the transaction should be made as seamless as possible but still consider the elements that brought the user to this point. For example, if it has been determined that time constraints played a significant role in the purchase, those factors must be clearly viewable to the consumer. 

Post-purchase evaluation

One of the most important phases then comes after the purchase, and this is one phase fatally ignored by the sales funnel. The post-purchase evaluation will determine whether a consumer decides to buy from your brand in the future. While much of this decision may lie with the performance of the product itself, the role of the brand must not be underestimated. 

Providing support on how to use a product and following up to confirm that it was received in good condition may seem like housekeeping, but considering that the consumer has already gone through many stages to arrive at this juncture, it is a waste to assume that they will buy again moving forward. Even short-term purchases like food delivery must be allied with supporting information, and although this isn’t to say that every Deliveroo order should come with a copy of War & Peace, advertising the product to the consumer shouldn’t stop just because they have made a purchase. 

Arguably, this is the most crucial time for a brand, as an inferior brand experience may mean that the consumer decides never to use the product or service again. Furthermore, if you consider the basic principle of the Pareto model (that 80% of sales come from 20% of customers), it makes financial sense to encourage one-time purchasers to become two-time purchasers rather than chasing after more new customers. 

Reasons For Changes To The Purchase Process

“If you change your mind, I’m the first in line.” ABBA, 1978.

It is a travesty that the opening line of ABBA’s’s ode to desperate singles across the world hasn’t become the clarion call for marketing managers trying to lure unsuspecting consumers away from their favourite brands. Who knows how much further along we’d be as an industry if we indulged in a little lateral thinking when listening to 1970s pop.

One of the vital mechanisms that marketers need to understand when determining the nature of their consumers is why people change their purchase process or choice, and some of the factors that play into these changes are as follows.

Mental State

Consumers are different from marketers, but they aren’t freaks. If someone stops buying your product, it isn’t because of brand love or brand affinity. These words describe something after the fact, but they aren’t predictive, which in the sense of building a profile of consumer behaviour makes them pointless. Much more scarily, a lot of the time, people don’t buy things simply because they are in a different mood. 

How horrifying. If only there were a way we could medicate the masses to be in a 100% predictable mood. Then we’d be in the money with our sempiternally predictable sales targets! But alas, people can often feel good or bad for no determinable reason. 

Understanding your demographics can put your brand in a fantastic position, but one thing that cannot be predicted about someone is how they are feeling at any given time. There is extensive research showing that encouraging a positive mood in the consumer can help increase purchase behaviour. However, If a person is in a bad mood, the inverse will be true, and this can be tough to predict.

It can be said that the effect of this factor can be mitigated for many types of purchases. For those with a long decision-making process, it is unlikely such a mood will persist, and due to the rationale needed when making such a decision, emotional responses will be ignored to a greater extent. 

This being said, marketers should still take preventative measures to avoid marketing their products and brands when consumers are in bad moods. Significant events such as governmental elections or natural disasters can often serve as predictors for such behaviour, and it remains to be seen whether automated services are developed to turn off paid ads in response to events (e.g. holiday ads after a news story on a plane crash). For now, determining the sentiment around specific pages and websites can inform the placement of display ads.

Risk Perception

We are a very fearful people. 

Fear of death. 

Fear Factor. 

“Project Fear”. 

A whole lot of what we do is in response to not wanting something to happen that hasn’t happened yet. And this is no different when it comes to buying things. 

Unfortunately for marketers, risk perception can bleed into a multitude of areas. Can I really afford this? Is the product going to be good quality? Will eating this entire XXL pizza by myself have an adverse effect on my ability to get into my jeans? 

To understand how people approach risk, we first need to appreciate how people come to make decisions regarding risk. 

When choosing a product, the risk attached to making such a decision needs to be mitigated as much as possible. The issue for marketers is that it can take just one thing to go awry, and the whole transaction falls apart. This is because the process is multiplicative rather than additive. 

Say you’re looking to buy some plane tickets. You have the money, the time, a good hotel, a top location, everything. But then you get a call from your best friend, and as you get to talking you tell them you’re about to book the holiday of your dreams. 

“Urgh. Not for me. Couldn’t stand it there.”

And just like that, the purchase falls apart. No reference, no reason. The reason for this is that we tackle risk by adopting a multiplicative decision-making system, and in any multiplication, anything times zero is always zero. 

To paraphrase from Rory Sutherland’s’s summation of multiplicative systems, failure to succeed more often equals failure than diminished success. In the aforementioned scenario, this zero-sum rationale would force people to err on the side of caution and pass on the purchase. The job for marketers is thus twofold:

  • Debunk the notion of risk by covering all the bases
  • Force the consumer to adopt an additive decision-making system

Both options are tricky, and depending on your product, one may be a more appealing option than the other. If you’re advertising fast food, rather than covering the risks (of which there are many), the best way to sell your product is to present it as something beneficial in spite of the risks. Conversely, if you’re trying to get clients for a cybersecurity firm, you’ll need to show you’ve thought of everything that could go wrong.

Brand Switching

Originally I’d planned to use some ABBA lyrics here rather than in the previous section, but fittingly, I changed my mind. In this case, it was because I couldn’t think of a good introduction to this section. But eventually, I decided on something else on a whim. Which is what consumers do when they throw away years of loyalty simply because someone put a better paid ad on their pizza delivery service. Bastards.

This being said, an important point to consider at this juncture is that there’s a big difference between brand switching and impulse purchases. Impulse purchases will usually take place in exceptional circumstances, and the consumer will revert to their preferred brand when possible. In the case of brand switching, the consumer will leave their previously preferred brand behind in favour of another. 

For example, someone who realises they need a shirt for an impromptu dinner will have to settle for whichever options are available to them, but this won’t necessarily mean they stop purchasing from their usual brand. In this sense, the name “impulse purchase” is slightly misleading, as it makes us think that the purchase is a snap decision, whereas it arises due to a lack of options in a given scenario. 

Brand switching is much more common for FMCG brands given that the timeframe in which the product is used is far shorter, and they’re usually aren’t any barriers to negotiate when making the switch. However, this doesn’t exclude products with a longer life span from being susceptible to brand switching. 

As with the example given in the first paragraph, what is important to note is that a single ad or promotion may seem like the exact trigger for a switch, but you must also consider that the reason for the switch will be built into a slow build of brand equity for the consumer. After all, you’re unlikely to decide to order from a new pizza place that you’ve never heard of, but you may choose to go for another that’s been on your radar, especially if your last few orders have been a bit dodgy.

The last point is especially important here. Brand switching will happen when the factors by which a consumer evaluates their purchases become outweighed by another. Be it price, convenience, or quality, once another seems more desirable, the old will get the boot. Importantly, these values don’t need to pair up, and someone may decide to switch to an inferior brand as the cost of another is so much cheaper. 

Furthermore, consumer brand switching is often unavoidable. The best example comes with a change in a consumer’s financial situation. They may be content with their brand of supermarket, but after getting a pay rise and noticing a few ads showcasing superior alternatives, they may decide to change brands. 

Despite all of this, brand switching shouldn’t be viewed as a definitive death knell for brands. The best way to approach potential brand switchers isn’t to chase those who’ve left but to try and onboard those who switched to you in the first place. Every customer-brand relationship comes with an expiration date, so approach them the same way you would that yoghurt in the fridge that’s looking a bit iffy: realise that there’s plenty more where that came from and that it is not worth making yourself sick over.

Channel Switching

Over time, new ways of purchasing may come along that render particular brands successful and others as failures simply because they bet on the right horse. Now, this might be an oversimplification of the issue, as ascertaining where consumers will be purchasing their products in the future is a crucial part of the marketing process. But what can’t be ignored is that consumers have preferred channels, and if your product isn’t on there, you’re history. 

To take a well-used example, who can guess which of these graphs represents the compound annual growth rate (CAGR) of Blockbuster and which one is Netflix?

CAGRs showing Netflix and Blockbuster

You all get that? OK.

For anyone who didn’t and points out that the scales aren’t even because the one on the left stops in July 2010, it’s because that’s when Blockbuster went into liquidation. 

Were their products any different? Nope – and if anything, at this point Netflix was far worse off from an inventory perspective. Was it because Blockbuster had poor brand equity? Nope, in 2007 Blockbuster reported that they had 40% market share in the USA. 

Blockbuster later tried to change tack and go online, but the problem was too far gone by this stage, and too much of their business was tied up in physical stores. Ultimately, this didn’t affect the companies selling their movies to Blockbuster as they simply switched channel. However, the important point here is that not every shift will be so obvious, and even then, it’s easy for us to say we saw this trend coming with hindsight. 

A fascinating example about failing to switch channel comes from QVC, the live TV retailer. Before the internet, its cheesy infomercials were one of the main ways people found out about new products, and you can tell this is the case as QVC (and its competitors) were regularly lampooned on 1990s TV.*

*Along with the more academic reasoning that it set a record for first full-year fiscal sales for a new public company in 1986 when it turned over $112 million. Oh, and in the following years, it expanded into five more countries.

So surely, QVC is now another, albeit lower-profile, Blockbuster? 

Nope.

In fact, its business is doing better than ever. QVC registered $6.1 billion in revenue in 2017, with 92% of its US sales coming from repeat customers, highlighting that for all its gimmicky price reductions, it doesn’t need to push sales promotions to one-time consumers to keep the business going.

The crux of this point is that while you should be aware of which channels you’re pushing your product through, don’t get scared off by new, exciting prospects on the horizon. If you get to know your customers and what they’re after, you can adjust accordingly, which is what QVC has done, by doing absolutely nothing. 

The Psychology Of Consumer Loyalty

While it is handy for marketers to understand the mechanics of consumer behaviour, the real value comes with being able to influence it rather than merely being reactive. Marketers need to realise that they are not ITV producers, and The Chase cannot go on forever. The solution in this respect is to move from being the hunter and to being hunted by building a brand that consumers feel a sense of loyalty towards.

Unfortunately for lazy ecommerce managers, loyalty points programmes are not the answer. The use of such schemes by consumers is declining as people begin to realise that they earn next to nothing by participating, and even if it weren’t, it overlooks the core features of what loyalty truly means.

From a psychological perspective, loyalty is defined as “helping the group while harming oneself”, which makes for a tricky realisation that we aren’t really talking about loyalty in the same way as you would otherwise use the term. For the sake of ease (and because I’ve already used the word loyalty a lot before stumbling across this particular definition), we’ll keep on with it for now, but perhaps moving forward it is better to refer to “loyalty” as something akin to patriotism, as the reciprocal benefit to the individual is vastly skewed in favour of the brand. 

Typically, there are four reasons that people may display loyalty:

  • Personal gain
  • Others’ gain
  • Joint gain
  • Total gain

The first three reasons may also be split between the paradigms of maximum and relative outcomes (i.e. actions are not motivated by distinct outcomes with no downsides, and these rationales are not always followed to the extreme). The challenge for brands arises in fostering a perception of total gain, wherein they and the consumer are equals while ensuring that they are the ones who profit from the relationship financially. To achieve this, a brand must hit upon the pillars of uniqueness and reciprocity.

Uniqueness

Having a schtick or hook is all-important for a brand, but simply being different isn’t enough, as the majority of consumers won’t notice a vague sense of differentiation. In reality, a better way to describe “uniqueness” would be less passive and more aggressively different from others, almost bordering on isolation or sui generis.

Forging this abstract sense of uniqueness can come from something as simple as positioning against a competitor who is diametric to your values*. Creating a brand identity is essential, but it’s also crucial that the consumer understands how their self-perception will be changed by purchasing your product. 

*It is important to stress that your brand doesn’t actually need to be unique, but it must nonetheless convey that it offers something consumers can’t get anywhere else. 

To explain further, a famous study from Henri Tajfel in the 1970s categorised people at random and then offered rewards based on these categorisations. The results showed that subjects were likely to discriminate against those not in their own category, even if it came at the cost of losing objectively identical advantages. 

While the study horrified many as it showed humanity’s propensity for prejudice, it illustrated that brands could make it more likely that consumers will refrain from switching by indicating that other products are intrinsically “different”. The main problem for brands that comes with this Colonel Kurtz-ification of their brand is that while continuing this practice may increase loyalty to existing followers, it may create a grotesquely unattractive prospect for non-consumers. 

An oft-cited example comes from the PC vs Mac adverts featured around the world in which Apple reservedly showed the differences between their product and others. What was great about these ads (besides the fact that they were funny) was that it portrayed a sense of “uniqueness” without attacking the other too viciously. Macs were positioned as something more than PCs, building on the positive rather than attacking the negative. 

Reciprocity

A concept drawn from social psychology, reciprocity describes the social construct of responding to actions equally, and was the founding principal that gave us the concept of “an eye for an eye”. In a clumsy attempt to translate this principle to the consumer-brand relationship, many marketers have invoked the dreaded reward scheme, seeing this as the one-size-fits-all that will quash the notion that the brand has all the power.

The main problem with the rewards schemes is that consumers are becoming underwhelmed with this act of reciprocity, and so brands have had to change the way they nurture this area of the relationship. One crucial aspect is that consumers need to feel like they are gaining something, rather than getting a discount on a service or product they would be purchasing in any case.

Jeff Bradford recently wrote about how sending gifts to prospective clients helped his agency win work after previous pitches had ended up in the bin, and the power of giving back to consumers should not be underestimated. The idea is hardly new, but many brands still fail to grasp that consumers don’t want money off products they were planning on buying, but instead, they want free stuff. Competitions are an excellent way to do this and mitigate costs, but ultimately the feeling of reciprocity will be diminished if consumers are only given a chance of winning a prize. 

In Summary

Hopefully, you’ve been able to learn a lot about the basic structures underpinning consumer behaviour from this article. If you’ve found it engaging, I would urge you not to stop here. While consumer behaviour is not pseudoscience, it is still a social science and thus sempiternally changing and evolving. As such, the best way to truly grasp it is to read contrasting theories that not only dispute one another but also challenge your understanding of the subject.

In such complex systems as marketing and psychology, it is tricky to draw concrete conclusions, as those that do tend to be either so specific as to render them reasonably useless, or so broad that they overlook the minutiae of many circumstances. Unfortunately, there is no holy grail that answers all of your questions, as every brand and every person you’re trying to market to is different. 

The fact that each brand is different is what truly separates consumer behaviour from the other strands of psychology. In the main discipline, responses to a stimulus are measured, and conclusions about the wider population are drawn based on large samples and averages. However, with consumer behaviour, the crux of the issue lies in how consumers react to different stimuli, making it much harder to draw exact conclusions. 

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