What factors lead a potential customer to a purchase decision?
There are a wide variety of things that will influence a purchase decision – budget, timing and personal psychology, to name just a few – but according to Richard Edwards of Quatreus Ltd., there is one fundamental factor that brings all these influences together: value.
Value is a subjective perception created through a blend of need, price and the belief that one product is better than another.
'Good value' is seen as a high quality solution which meets all of a customer's needs at a reasonable price.
Here Richard breaks down how this need, price and belief is really constructed, and how it plays into a perception of value.
I see a pair of hiking boots on special offer, and I recognise the brand; but the fact that I don't go hiking means that I won't value them highly.
Some marketing works to convince the consumer that they have a need. For example, if I'd 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.
Grooming potential customers this way is an excellent way of enhancing the perceived value for your product / service and can help you break into new markets.
Set your price point as high as you can; this helps to enhance the perceived value of your product.
A big mistake is to slash prices. This can work, particularly when it comes to more exclusive discounts, but offering a huge discount lowers the perceived value of the product. I mean, who is ever going to pay 'full price' for a sofa at DFS when most of the year they are offering 50% off?
Belief in product
The price point will often lead customers to believe one product is better than another. However, people will not be willing to pay a higher price if they do not believe in the product; the two factors work in tandem.
Belief is about your brand, your marketing, and their knowledge of the product range. It is what 80% of your marketing budget goes in to creating. And it is the one area in which you have the most control.
So how do you go about creating this belief in your product or service?
There is no single method, but there is a core concept: "Tell me and I'll forget, show me and I'll remember, involve me and I will understand."
People will likely forget the specifics, but they will be primed to receive your brand, and this priming can be important in establishing credibility.
For example, you 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 verbal memory, particularly when 'show me' still involves some verbal explanation; 'show and tell'. Exhibitions and trade shows are great for this.
'Involving' your prospect creates an experience that utilises 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, you can create a need. 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, 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.