What Drives a Consumer's Decision to Buy?

Understand the Reasons Customers Buy Products

To develop a successful marketing strategy requires a solid understanding of the market, the customer and the job a customer hires a product to do.

Clayton Christensen gives the example of milk shakes being used in the morning as a breakfast substitute for people on their drive to work and in the afternoon as a reward mothers gave to their children after school. In his example the milk shake had been “hired” to do two different jobs by two different customer groups. Clearly price alone could not describe the different jobs the product was “hired” to do nor could it describe the value of the product to either group. In the case of milk shakes characteristics that would need to be included would be the availability of the product and price as it relates to alternative products.

To measure the considerations a customer must make regarding the purchase of a product it is important to use a process that measures what is influencing the decision. Influence can be the result of tangible and intangible product characteristics as well as environmental factors.

Tangible characteristics would include size, weight, and other physical properties of the product. Intangible characteristics would include guarantees, customer service, and ease of understanding how to use the product or product training and so on. Environmental factors can include influence of friends or social pressure.

Measuring these characteristics helps understand the real job the customer has hired the company and its products to do. GWR Research developed a process to describe and measure these characteristics.

To help describe product characteristics we created  “Consumer Adoption Drivers”  (CAD). The CAD list is as follows:

1)    Group Influence Intensity – relates to peer pressure exerted on customers

2)    Perish ability – the length of time the product is deemed useful,

3)    Psychological appeal – status associated with the product

4)    Price sensitivity – the need for the customer to budget for the purchase,

5)    Relative Price Influence – the attractiveness of other products as a substitute when price is a consideration,

6)    Frequency of Purchase – The frequency with which the customer purchases the product,

7)    Search Time Intensity – the amount of time invested in the search for the “right” product,

8)    Tangible Differentiability – physical differences between products,

9)    Intangible differentiability – non-physical differences between products (guarantees, relationships with company, branding etc.),

10)Technical Complexity – the need for training before a customer can use the product. This may be a factor in determining the type of sales force that will be required.

The table below arranges each “driver” next to a semantic differential. Using a fairly simple research survey, customers can rank the “drivers” as being of high, low or no importance. Analysts can use questions that elicit responses for each CAD descriptor.

Dimension	High	Low	None
Group Influence Intensity
Perish ability
Psychological Appeal
Price Sensitivity
Relative Price Influence
Frequency of Purchase
Search Time Intensity
Tangible Differentiability
Intangible Differentiability
Technical Complexity

Customer Survey Process

Using focus groups to get a qualitative feel may provide a good start to identifying customer groups according to CAD.

For critical strategic decisions, customer group surveys should be large enough to provide results with a high level of statistical confidence.  For these surveys the survey groups can be divided into three categories (Key customers that account for the majority of the business, Under potential customers that account for expenditures on like products but with competitors, and nonusers). The Key customer and Under-Potential customer categories may require a census to provide statistically significant findings. Nonuser categories are likely large enough to use random sampling techniques.

Questionaire Design

The questionnaire used in the customer survey should provide several questions for each “driver” using a semantic differential.

For example a question for Group Influence Intensity might be:

Would you say that the influence the people you work with have an influence on the type of automobile you purchase? Is the level of influence high, moderate or low?

By quantifying the semantic differential for each driver, a ranking chart can be developed to analyze the responses.

Analysis of the data

Using the example of luxury automobile consumers, an example of the CAD analysis is shown below.

                        KEY CUSTOMERS  - LUXURY AUTOMOBILE CONSUMERS

	GII	Perish	Psy. a	Price	RPI	FOP	STI	TD	ID	TC
High	+		+				+	+	+
Low		+		+	+	+				+
None

UNDER POTENTIAL CUSTOMERS – LUXURY AUTOMOBILE CONSUMERS

	GII	Perish	Psy. a	Price	RPI	FOP	STI	TD	ID	TC
High		+	+	+	+	+	+	+
Low	+								+	+
None

For the Key customer categories of this company, Group Influence Intensity was considered high as was psychological appeal, search time intensity, tangible differentiability and intangible differentiability.

One could then assume that a marketing strategy that used individuals viewed as peers in ads would have a positive effect on this category. Additional strategic components could be creating a strong brand image and a focus on unique product attributes.

For Under potential customers, perish ability, price and frequency of purchase also are important factors. A successful marketing strategy here might incorporate product reliability (long life) and resale value.

The CAD analysis approach to developing marketing strategies improves the ability for marketers to understand what influences a customer and their product purchasing decisions. It also helps understand what a customer is hiring a product to do. In the example above it appears that key customers are using the purchase as a means of maintaining their social status. Under potential customers are also hiring the car for social status reasons but want to be assured that the product is a good value to perhaps fill the need to be viewed as a smart buyer.

The marketing strategy that is subsequently developed would align the 4Ps of marketing around these findings for each customer segment.