Richard Edwards, Director of Quatreus asks, what factors lead a potential customer to a purchase decision?
That is the key question that we, as marketers, need to answer to help the clients and companies we work with.Whether you are a marketing professional, or an owner looking to build your business, knowing the factors involved is essential. It means you can create a complete marketing strategy and direct the marketing budget to activities that support it.
A variety of things will influence a purchase decision, such as budget, timing and personal psychology to name just a few - but there's one fundamental factor that brings all these influences together, and that's value.
Importance of value
Value is a subjective perception created through a blend of need, price and the belief that one product is better than another. A product or service described as good value is seen as a high-quality solution, which meets all a customer's needs at a reasonable price. But let's stop and break down how need, price and belief are really constructed, and how they play into a perception of value.
I may see a pair of hiking boots on special offer, and I may recognise the brand as a market leader, but the fact that I don't go hiking or have any other need for the boots means that I won't value them highly.
Some modern marketing works to convince the consumer they need a product where perhaps they wouldn't have thought so before. Let's use the hiking boots again. If, before I had seen them, I had also read an article explaining how hiking boots improved posture, helped stimulate blood flow and were good for your feet, then by the time I saw the boots, I may have developed a 'need' for them.
Priming potential customers by providing this kind of information is an excellent way of enhancing the perceived value for your product or service and can help you break into new markets.
The first rule of starting a new business is to set your price point as high as you can - assuming you aren't targeting the budget end, of course. This won't help you on your way to buying a yacht, but will enhance the perceived value of your product.
Why do people buy branded products over supermarkets' own brands, despite a huge price jump? Because they reason that superior products cost more to create. This is often a fair justification, but does the difference in production cost really justify doubling the price? Probably not.
A big mistake that I see companies make all the time is to slash their prices or offer tremendous discounts on their low-volume products. This can work, particularly when it comes to more exclusive discounts, such as a voucher for loyal customers or an introductory offer. However, offering a huge discount lowers the perceived value of the product. I mean, who is going to pay the full price for a sofa at DFS when most of the year it's offering 50 per cent off? The sofas are now only ever going to be valued at half the ticket price - any more and people will not purchase.
Belief in product
This factor overlaps somewhat with price. The price point will often lead customers to believe one product is better than another. However, people won't be willing to pay a higher price point if they do not believe in the product. It may sound a bit circular, but in reality the two factors work in tandem.
However, the belief factor goes much further. It's about your brand, your marketing of the features of your product, and their knowledge of the product range. It is what 80 per cent of your marketing budget goes in to creating. And it's also the one area in which you have the most control.
Creating a belief in your product
So how do you go about creating this belief in your product or service? Is there a single best method, or does it depend on the item or service you are selling? Does it matter whether you are selling business-to-consumer or business-to-business?
While there may not be a single method of developing belief in your product, there is a core concept. It rests on the old Chinese proverb, "Tell me and I'll forget, show me and I'll remember, involve me and I'll understand." Tell me Let me be clear, telling is still an important step. Yes, people will likely forget the specifics, they may even forget your brand, but they'll be primed to receive your brand, product and service, and this priming can be important in establishing credibility.
For example, you may conduct a PR campaign where you write thought-provoking articles relating to your product or service. In the article, you describe the problem (establish a need), drop some hints as to a solution (brand priming) and get it featured in an established trade magazine (credibility).
The visual memory is more powerful for most people than the purely verbal memory, particularly when 'show me' still involves some verbal explanation. Show and tell, if you will.
The efficacy of showing off your product or service is demonstrable by the growing popularity of exhibitions and trade shows. You would have thought that with the digital revolution live events would all but die out, yet almost the opposite has happened.
'Involving' your prospect creates an experience that uses all three types of memory/learning: verbal, visual and kinesthetic (touching and using) to create an almost unbreakable belief in your product. If you are there to tell the prospect the benefits of the product or service, you can create a need for certain features. At the same time you show how the product or service meets those needs visually. Then, the final step, you let the prospect have a play with the product or service, get them involved in using it, create an experience.
Creating a complete and immersive experience of your product or service increases recall, generates belief in the product and, in the end, turns prospective customers into brand ambassadors. You aren't as likely to share the fact that you saw some new product, but you will want to tell people what you just tried out. Experiences are made to be shared!
Richard Edwards is the Director of Quatreus. The company specialises in creating face-to-face experiences that strengthen relationships and improve communication for both internal and external audiences. Activities include customer facing events and activities, exhibitions, trade shows, roadshows and interactive experience centres, as well as conferences, AGMs, and staff and stakeholder engagement programmes.
For more information see: www.quatreus.com.