Why We Buy Things
There are only two reasons we buy things. We make purchasing decisions based on either need or want. However, We become confused between the two.
We substitute need for want when we speak. I need a vacation. I need a higher grade on this test. I need a new car. Do we actually need them? We certainly want them. But, they aren’t a necessity.
It’s hard for humans to understand the value of things. We allow outside factors, not necessary to the purchase, affect our decision. Behavioral economics is completely focused on understanding why we make purchases with our hearts rather than our minds.
Many variables and human bias come into play when making purchasing decisions, but, all purchasing is based around a rational or emotional decision.
Need-Based Purchasing
Anytime we buy a product based on necessity we are using need-based purchasing. Need-based purchasing is based on rational decisions. With it we identify having a problem and research solutions before making a decision to buy. It revolves around utilizing a value-based approach.
Examples of need-based purchasing:
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We need a book about marketing. We read a few reviews, ask our marketing friends for advise, and then select a book using this information.
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If our phone breaks, we replace it with a new phone.
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Choosing a generic brand instead of the name brand, because it is 20% cheaper.
Need-based purchases arise because of a change in our lives. The change can be as simple as running out of milk or as life-changing as the addition of a child or spouse.
Want-Based Purchasing
Want-based purchasing is based on emotional triggers. We buy things using our hearts and emotions. Our ability to reason becomes cloudy. We make want-based purchasing decisions because of the product design or how it makes us feel.
Peer and social pressures contribute to want-based purchasing decisions. We spend money to feel better about our social and economic status. In one study, people spent more money when a negative economic image was reinforced. In other words, when we are reminded that we don’t have money, we want to spend more money.
Any product that makes you feel cooler, prettier, sexier, or more powerful are want-based purchases. Status symbols, like designer clothes, luxury cars, and jewelry, fit into the want-based purchasing category.
After purchasing, if asked, “why did you buy that,” we have difficultly justifying the purchase.
We make want-based purchases when we’re lonely. We require a temporary delight and base our purchasing decision on emotional satisfaction rather than rationale. Emotional needs can be incredibly strong. Is it any surprise we pay for these items with credit cards rather than saving our money before purchasing?
Reinforcement
Both rational and emotional purchases can be supported and reinforced by others. If someone recommends a product, our need for that product grows. The more we like the person, the stronger the need becomes. This is why celebrities are paid for endorsing products. When we see someone we respect, using a specific product, our perception of the product’s value is increased.
After reading a Gigaom article discussing products with great user experience, I suddenly wanted two of the products discussed. My current toothbrush and iPad case work fine. But, I wasn’t having a great experience with my products. I didn’t want to share them with others. My current toothbrush seemed worthless compared to the Oral B Professional Care SmartSeries 4000!
Compared to bare bones electric toothbrush, the SmartSeries 4000 sets great default behaviors that require virtually no brain cycles for the user to brush properly (perfect for those groggy mornings). For instance, the brush beeps every 30 seconds (or 45 if you choose), ensuring that you spend enough time on each quadrant of your mouth. If you ever brush too hard, a prominent red light engages and the brush vibrates at an audibly different frequency to alert you. Another nice touch: The bristle color fades to indicate when it’s time to change the brush head, so you never have to keep track yourself.
My decision was being driven by want. When marketing a product, case-studies and positive external reviews will drive more leads for your product than advertising or press coverage. You will acquire more customers from a positive review on a well-read blog than a TechCrunch article.