Why do we go into a Starbucks coffee shop and pay 4 euros for a coffee?, and
Why is it that ten minutes later we are happy that we got a nice saving of 0.50 cents buying ½ kilo of private label coffee in our regular supermarket?
We recently had a friend over for dinner and at some point in the evening he asked me why we had decided to buy that particular house. First I began to give him a whole series of very analytical and convincing arguments. What if the price, location, ideal size, etc. etc.
However, at a certain point I stopped, paused and thinking about it for a few moments I remembered the moment when my wife and I first walked in and looked at the view; It was love at first sight, forgive the redundancy.
I think the decision was made… But since that sounds so crazy, we ended up rationalizing it to ourselves and others.
From a traditional Marketing perspective, I think that a disproportionate part of our efforts have focused on influencing purchase decisions through persuasion, using a series of arguments based on rational behavior: characteristics, advantages, comparisons, etc. price etc. This stems from the traditional economic view of human nature; people are rational, they seek to maximize utility, to save and for individuals to have relatively stable preferences.
However, when we analyze them in the real world, we understand that human beings live in the here and now; their decisions are strongly influenced by the context – which vary in time and space – and are subject to emotions, social influences and prejudices. We observe Shoppers behaving inconsistently, irrationally, and with sudden changes in their preferences, despite what they might think or say.
There is a consensus among neuro-scientific authorities (eg Goleman, Bechara, Damasio, etc.) that emotions help us learn and make decisions.
The underlying reasoning is that in a world as complex as the one we live in, it is simply not possible to carry out a rational cost-benefit analysis alone; this would be too time consuming and tremendously tiring as there are too many variables to consider.
In the book The Error of Descartes. Emotion, Reason and the Human Brain by Antonio R. Damasio begins to analyze in depth the relationship between reason and feelings, emotions and social behavior.
Damasio demonstrates that it is extremely difficult to fully separate reason from emotion, making it impossible for a person incapable of feeling emotions, no matter how rational, to continue making the right decisions adapted to his environment. Damasio further argues that emotion, consciously and unconsciously, is necessary in all decisions and that emotional reactions to past situations can influence our current decisions, especially in the retail sector.
Unlike the previous study, Donovan, Rossiter, Marcoolyn, and Nesdale (1994) measured emotions during the buying process and the effects on actual buying behavior. They found that a pleasant environment in the store was a predictor of extra time spent in the store, and consequently, higher spending.
This study has had tremendous implications for retail, since it concluded without a doubt that the store environment can produce emotional states, which in general affect the time and money that consumers will spend.
Here the concept of the Shopping Experience began to be generated.
On the other hand, Daniel Kahneman (Thinking Fast and Slow) outlines a model that can help us understand the two types of thoughts that we all use in our purchasing processes.
Type 1: automatic, unconscious, instinctive, implicit, quick, and driven by emotions and associations. It is typical in regular purchases.
Type 2: reflective, conscious, reasoned and explicit, slow and sequential, deliberate and rule-based, and uses calculation to reach decisions. It is normally the type of behavior that we observe when we try to buy something new and different.
Kahneman expresses that the two types work in parallel, but also insists that Type 2 is very hard work. We have a tendency to avoid it; for both evolutionary and practical reasons.
The reality is that the decisions are in his opinion, guided by some rational considerations of Type 2 (those of high relevance) but taking important "mental shortcuts" of an automatic, unconscious and instinctive nature of Type 1: thus, it is a combination of the two types of thoughts.
60% of Purchases in brick & mortar stores have a high EMOTIONAL content.
The world of online shopping is not very different either. In fact, 66% of the time
Online shopping behaviors include an emotional component, according to a recent study by AOL Research. For example, people shop online because it makes them feel happy, makes them feel good about themselves, or helps them relax, escape, and unwind. Some, on the contrary, buy with fear of leaving home and getting COVID-19 by interacting with other people in physical stores or simply because they are used to buying online.
24% of online purchases are motivated by EGO: when buyers feel motivated to stay up-to-date with the latest news in the category and stand before their peers as an expert. These buyers often "invest in content" so that they can then share it with friends, family and social networks. This type of behavior feeds the ego and recognition as an authority on the subject.
14% of online purchases originate from FEAR: in the face of crises, the Shopper tends to stock up on food, drinks and products considered essential to feel safe in the face of a threat. This impact is much greater in the physical environment, since the Shopper is often not willing to wait for the delivery of the product online.
13% of everything purchased is associated with REWARDS: when Shoppers feel inspired and looking for a reward. The brain generates dopamine that triggers the sensation of pleasure during the purchase process.
11% of online purchases are made for the simple fact of being BORED: When shoppers search and buy to get out of their boredom and add a little excitement to their day. They buy impulsively, without spending planning.
As we can see we are emotional animals and our decisions will always have a heart component without reason. Learning what your Target Shoppers feel when buying your category will give you a competitive advantage to explore differentiation against the competition.
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