The Consumer Behavior & Intent Puzzle

Have you ever told your partner or friend that you were going to go to the grocery store to get something healthy only to come away with a bag of chips and a KitKat bar? Have you ever signe

d up for a gym membership on January 1st just to find that you stopped going by February? Consumer intent doesn't always match up with actual activity. The puzzle to solve is figuring out what signals actually unlock purchasing intent. It is helpful to understand the consumer preferences mechanism when considering how to position your brand.

Over nearly a century, there has been quite a bit of research into customer preferences. The earliest theory, put forward by researcher Paul Samuelson in 1938, was that consumers were rational, and people would only purchase the things that fit their need and budget. The assumption was that if someone said they were going to make a purchase, that's the thing they were going to purchase. As you might imagine, over time, consumers have proven that there's more to the story. This is known as the difference between consumer's stated and revealed preferences. It helps us understand why focus groups may tell us one thing, but sales tell us something else.

First, think about when looking at consumer behavior, you can map your consumers to help predict who is going to purchase and when by comparing their gratification patterns against their variety seeking patterns. This is broken into 4 quadrants, please see the chart below.

Use the framework to better know how to understand your consumers.

Gratification, as studied as far back as the marshmallow experiments in 1972, looks at how long someone can hold out while waiting for a larger reward. Variety seeking rather speaks for itself; how much "NEWNESS" does someone require in their lives. Depending on whether someone is a Planner, Optimizer, Loyalist or Impulsive, different strategies may be more effective. 

But how can you trust what quadrant to put your consumer segment into? Experiments and tests have been conducted that show people often throw out false signals and what they spend their money on doesn't match with what they say. There are three consumer insights signals that have been uncovered to more strongly predict purchasing behavior. The first is obvious, the second and third less so.

Signal 1: Actual Spend - This is the easy one. Pay less attention to what people put in their cart and leave there. Pay less attention to survey responses. Put more weight on understanding what is actually spent. Track purchase frequency, completed basket composition, and price sensitivity patterns. If someone buys your premium line during promotions only, they're price-sensitive regardless of what they say on a survey.

Signal 2: Effort - How much push is your customer willing to put into completing a purchase? You can tell a lot about the demand for a good or service based on what inconveniences they'll tolerate. Will they drive an extra 10 minutes for your brand? Wait for backorders? Navigate a complicated website? Experiments show that effort investment reveals true preference as well as any Net Promoter Score.

Signal 3: Peacocking - Look at your consumers' social signalling in the purchasing process. Compare in-store purchases to online buying. Look at gift-giving choices versus personal consumption. Are they sharing their purchases on social? The delta between public and private behavior can help you understand to what degree has your brand been absorbed into a person's identity. 

By putting together research to examine these three signals, you should come much closer with understanding the appropriate quadrant your consumer segments belong in. Then, you can build your brand strategy and position your offerings accordingly.

#ConsumerBehavior #MarketingStrategy #CustomerInsights #RevealedPreference