Friday, November 28, 2008

How Customers Shop

There has been a ton of research over the years on how consumers make purchase decisions. On my radio show, I've interviewed many experts who offer up just as many explanations ranging from brand loyalty to price sensitivity, and everything in between. However, I've never found anything that replaces the Howard Model of Consumer Decision Making. In its simplicity, it breaks down consumer purchases into three possible categories -- habitual, limited, and extended decision making.

The easiest purchase are those we make from a habitual basis. A recent study by brand guru Erik Joachimsthaller, author of Hidden in Plain Sight, found that when customers went into a convenience store for a salty snack, they avoided the displays up front and went to the part of the store they knew had their desired snack. It was a routine, not a thoughtful choice. This scenario is played out whenever you buy that thing at the store without really looking at what's available, rather you shop for recognition of the package in the spot on the shelves you've seen it before. Purchases of gasoline, toilet paper, or other low-involvement commodities fit into this category.

The next level up is a limited decision-making purchase. This is when we are looking at options, but don't want to put a lot of energy into the purchase. A common scenario for this type of purchase is when considering what movie to watch or which restaurant to go to dinner at with friends. Typically, the purchase price is a bit higher than a habitual purchase, but not always. Price is not always a factor.

The third and most complex level is the extended decision making scenario. For example, this scenario comes into play when you're buying a car, a house, or getting a pet. This situation is very similar to the limited scenario except for what happens afterwards. Have you ever bought a car and then drove away feeling like you should have done this or that? Or on the way home you see your type of car everywhere? This after-purchase dissonance is common and suggests an opportunity for marketers to reinforce the purchase decision with added value and positive messaging.

When marketing, I've often suggested that marketers consider tailoring their communication programs first on where their product or service fits into the decision-making model, and then on integrating communications into the consumer behavior patterns. This creates an opportunity to not only stay relevant based on consumer activity, but also provides a better ROI by linking the communications program to the product value.

-- David Kinard, PCM

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