How Consumer is influenced to Purchase(Habit Formation)
Let’s pretend for a second you are an alien from outer space studying economics. You’re presented with these two options:
- Option A: People can make a cup of coffee for 16 to 18 cents in the comfort of their home.
- Option B: They can haul themselves out of bed earlier, stop at Starbucks and pay two … three … four … five dollars for a cup of coffee.
As a rational alien studying economics, you would know that people will certainly choose Option A.
Except, as we all know, people don’t. They choose Option B. Not everybody, of course. But enough people to generate $16.447 billion in revenue for Starbucks. So many people, in fact, that you must look at this purchase decision — which we’ve become so accustomed to being a part of daily life — as an alien economist to even notice that it’s not a rational economic decision every time people make that purchase.
Why people make repeated, economically irrational decisions
So why do people act this way? Because they are no longer making rational economic decisions; rather, they are on autopilot following automated habits. Starbucks’ marketing department has helped turn a simple cup of coffee into a cheap luxury habit.
It’s not just Starbucks; of course, it’s the daily newspaper on your driveway, Movie night, and even, the mundane act of brushing your teeth.
Mundane act it may be, but keep in mind the top ten toothpaste brands generated almost $1.2 billion in sales. So it would serve marketers well to get a basic understanding of the science of habit formation.
I’ve split the discussion into two blog posts. In part one today, you’ll learn how habit is at the core of many purchase decisions and the three components of habit.
Habit is at the core of many purchase decisions
The most successful marketing campaigns are campaigns that created habits, right? And I think equally that, and I’m sure that many people who are reading this know this even better than I do, that habits are at the core of many of the decisions we make about brands and about consumption and all the great things that marketers hope to influence.
When we looked at habits in people’s lives, what researchers have found, and in particular a researcher named Wendy Wood, who’s at Duke University — Wendy followed around a couple hundred people for almost an entire year trying to figure out which of their behaviours were decisions and which of their behaviors were habits.
What she found is that [as much as] 45% of what people do every day is a habit ,The way that we get to work in the morning, the route that we take, what we eat for lunch, where we stop to get gas, what kind of gas … we buy, what kind of soda we drink. All of these things are habits and so understanding how habits function within our brains and within our lives is critical if you are someone who hopes to influence people’s behaviours through marketing.
Every habit has three components
There is no natural state of nature where someone says, apropos of nothing, ‘I’m eating a cookie. What I really need right now is a glass of milk. That’s the power of creating a habit, is that when you start eating one of those delicious Oreos or those chocolate chip cookies, you think to yourself, ‘A glass of milk would taste fantastic right now.’ That’s a habit. That’s because someone really, really cleverly figured out how to link within your brain, cookies and milk.
Best example would be the case of Febreze, that Proctor & Gamble invented this new product that at first was a huge flop. Then they figured out how to make Febreze part of people’s cleaning habits, how to deliver a reward that made people crave that smell, and that made Febreze into a huge hit.
One of the keys things here that at the core, and we haven’t talked about this yet, at the core of sort of the insights about how habits function is this basic finding which is that every habit has three components. We know this from studies in neurology and psychology.
A habit is, first of all — it’s a cue, which is a trigger for an automatic behaviour to start, and then a routine, which is the behaviour itself, and then finally a reward. That reward is how your brain learns to make that behavior, make that pattern, into something automatic, make it into a habit.
So once you recognize that, it gives the brands this really powerful tool for trying to understand — how do I sell a new product? How do I get people to eat more healthily by better habits? How do I get them to drive a different way? How do I get them to find this app that can change their lives? It’s by recognizing that there are these cues and rewards that drive how we automatically behave.
Understanding the reward schedule for customers
Have you seen any examples of customer habits actually influencing the brand? So working vice-a-versa or a smart brand out there that’s doing some research and really sees what natural customer habits are and taps into them as opposed to creating them
Source-Marketing Sherpa
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