Cashing in on Retail Psychology
Leveraging the ‘Why’ Behind the Buy
For retailers seeking to sketch out a niche in an already oversaturated marketplace, engaging with the thoughts of consumers can lead to long-term results.
Consumer Behavior & Retail Psychology
Consumer behavior boils down to how people act, reason and, consequently, select options. It can be broken down into three distinct models.
The black-box model assumes the primacy of external stimuli, which trigger potential customers to identify a value in a product such as marketing messages, promotions or pricing. Conversely, the personal-variable model presupposes the internal biases that play a larger role in decision making such traditions, cultural frameworks, beliefs and identities. Meanwhile, the complex model is simple: a mixture of the former two.
These ideas congeal into the foundation for consumer behavior. Understanding that behavior flows right into the importance of retail psychology, which is about how people largely think and subconsciously make decisions; it’s a personal-variable model of consumer behavior.
From focus groups to market research, producers are adamant about reaching their target audiences and will employ the necessary tools to understand the association consumers make with their product or service. For example, hiring market ethnographers can fill a necessary role. These sociological researchers offer a cross-cultural examination of consumer products to marketers in real life usage. They speak to consumer behavior and retail psychology from a sociological framework and can better help corporations and marketing professionals understand the connection different people have with the content they produce and market.
The Role of Behavioral Economics
Retail psychology and consumer behavior are a largely cultural phenomenon. They’re influenced by culture. Behavioral economics are a purely market-driven, market-based singularity that has material and personal implications for sellers and buyers alike.
Retail psychology is the foundation of behavioral economics or, more aptly, why and when people choose to make consumer choices. Data has shown some like to signal status as opposed to individuality or vice versa. Others are duped by suppliers claiming products are in short supply, exclusive or heavily discounted. All these things influence the choices consumers make and the brands they choose to engage with.
A prominent example of behavioral economics in action is J.C. Penney’s corporate decision to get rid of coupons and move toward an “everyday low prices” model to help consumers save money on a consistent basis. Shoppers were no longer under the delusion of saving money through deceptively marked down, and the business suffered.
A 10-month long investigation by retail organization Checkbook found that discounts in stores are largely misleading. While the price may be similar to the regular price, the “60% off” sticker causes shoppers to believe they got a deal and dissuade them from looking for lower prices elsewhere.
Profiting Off Retail Psychology
One potential way to effectively cash-in on retail psychology is through social marketing: improving the material conditions of people. This allows a tacit association to be made between a given brand and social good, and consumers are motivated, in part, by signaling their values, status to other people.
Signaling a “good Samaritan” status is a huge trend for young audiences. For instance, a Futerra survey of US and UK consumers found 88 percent want brands to be an ethical force in their life.
Build a community between and among consumers and the product or service. Social media connects otherwise separated people and etching those threads through a popular product or service can elicit a strong sense of FOMO (fear of missing out) in audience’s not privy to the community. It creates loyalty among established consumers and entices others through digital word-of-mouth.
Brand identity and association plays an ever-increasing role in people’s lives and how they view themselves. Tapping into this and using retail psychology can create a symbiotic relationship with consumers where they become loyal patrons and brands become a positive impact toward self-actualization by associating themselves with a user’s personal identity. It is all about reciprocity.