Why we buy what we buy
Every day, people decide to buy something that is more expensive than something else even though it fulfils the same task. We buy the 1000 Euro iPhone over and Android, even though, at least today, there is not that huge of a difference in performance anymore. But we are happy to spend this much more money on the Apple product.
Why do we spend more for the same
Well, this could have a variety of reasons. All reasons are connected to one simple concept. The concept of brand value. For every target group, the reason why they have attached internal values to the brand is going to be different. For some, it might be that they identify with the values of the brand itself, creativity, autonomy and quality, in Apple’s case. They buy the product to be more like the person they want to be. That they desire to be. To support and show who they are to the outside world. The motivation behind a purchase could also be of social nature. Picture an environment of people where you are only accepted if you use a certain brand. Therefore you would buy the product, not for the reason to truly show your personality but to pretend that you are like the others and therefore fit in.
To embed the concept of brand value, three factors guide our buying decision. In this concept, there is only the price pain, that prevents the customer from buying the product at first glance. The Brand Value or the Framing and Moderation could also prevent shoppers from buying your product. If the brand has a bad reputation, customers have a negative set of values attached to your brand which also prevents them from a purchase. If the Framing and Moderation at the point of sale, let it be a website, is so horribly done, that the customer has to click through five different sub-pages in order to make the purchase, the jump-off rate will be going up and you will also prevent the customer from making a purchase.
This is why it is important to take good care of every aspect stated in this concept. Arguably taking care of one factor is easier and costs fewer resources than the other but when it comes to business, it’s a high-performance game where every opportunity not taken is a loss for the company and its growth.
Three factors guiding our buying decision
- Framing and Moderation
How is the product presented in-store or online? Is there a salesman who engages in a real and meaningful conversation with me? Are only 3 Articles left in stock pressure me into buying the product right now?
- Brand value
What are the values and the emotions that I attached to the brand in the past? Do I think this brand is important for me to be accepted by others? Do I want to associate myself with the “Hero” of the brand’s advertisement campaign?
- Price pain
How much does it hurt, to buy the product? A person with a lot of money will obviously have fewer concerns about the price of a product than a person with less money.
Depending on those three factors, we can evaluate, what has to be done differently to get the product sold. Do we need to work on the brand in order to enhance the brand’s value so we do not have to lower the prices? Or do we have to inform the customer about the stock of a product so he impulsively buys it?
No brainer decisions
Have you ever bought a product and not even thought about it? Have you called this a “No brainer decision”? In case you have, the offer was so good and graphically speaking off the charts, that the positive factors just covered the price pain if not even the price was so low that the price pain was internally rated as positively low and not negatively high.
This happens often with sales. We see a high-value product, which cost 1000 Euros and then we see the offer of getting to buy it for 800 Euros. That seems like a great deal, doesn´t it? So it could be, depending on the other factors and how much money we have, we internally evaluate the price pain as positive because we only think about the 200 Euros we save on that purchase. Depending on the Framing and Moderation, the customer now could lead to an impulsive decision. An impulsive decision emerges from pressure. If we state, that the sale is ending in 1 hour, we pressure the consumer in making an impulse purchase. In this case, another factor comes into relevancy. The factor of fearing losing something. The customer maybe has already imagined what he would do with the saved 200 Euros he has saved. He would concentrate on the 200 Euros so much that he might forget that he spends 800 Euros on a product he or she might not need anyways. When we fear losing something, we are more likely to act rapidly with higher-risk commitments.
Why you should focus on value instead of the price pain
When a company starts to participate in the price with other companies, it is a race to the bottom that nobody wins. In fact, your brand will always be the cheaper alternative. When we buy a product because of the low price, we buy the product out of need instead of desire. When your brand just stimulates and fulfils the needs of its customers, you will likely end up participating in a price war with your competition. When you instead focus on the desire, the value part in the buying decision structure, you do not participate in the price contest but rather in the emotional contest.
In branding, what counts most is to build a mutually beneficial relationship between the company and the customer through the brand. We need to keep in mind that without the customer purchasing the product, there will be no company left in a few months. With this set of factors that drive the buying decision, we can steer the direction in which the company goes in order to remain a mutual relationship and also growing purchases of the product.