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Brand Value & Pricing

Why People Buy And Don’t Buy

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Why people buy is not the same as why people don’t buy. For brand marketers, it’s a difference that matters more than ever.

The things that motivate people to buy are product features that people want. People buy a particular car because it has the gas mileage they want. Or they buy a certain smartphone because it has the multimedia capabilities they prefer. Or they pick one brand of detergent instead of another because of price. (I am leaving out emotional benefits in these examples, but only to keep things simple not to suggest emotional features are unimportant in a category.)

When it comes to making a purchase, people want the best product of that type. So the things that matter when people buy are the things that make one brand a better choice in that category. When the cash register rings, it signals a buying decision that has been made on the basis of category features, as well as the trade-offs people have made of one feature versus another.That’s why people buy.

It’s not that simple when people don’t buy. Obviously, one reason people don’t buy is because another brand has better category features, as just mentioned. But a different dynamic looms larger. Some things that matter little in deciding to buy are all that matter in deciding not to buy.

This is where something like social responsibility comes into play. For a growing number of people, social responsibility is relevant to their marketplace decisions. Yet, little research shows it to be a big part of decisions made between brands in a category. That’s because social responsibility is not about why people buy; it’s about why people don’t buy.

Social responsibility, corporate ethics, workplace safety and other such non-product attributes factor in as reasons not to buy. People avoid, ignore or boycott a brand, or even a category, because it doesn’t measure up to standards of good stewardship and rectitude.  But once that hurdle is cleared, the choice between other equally principled brands is a matter of category features.

The knock on something like social responsibility is that despite the lip service given to it, it doesn’t influence behaviors. This is true in the narrow frame of picking one brand over another. But it is not true in the broader frame of choosing any brand or category at all. The influence of social responsibility and other such considerations plays out in the brands or categories people are willing to consider to begin with. Far more often than not, the impact of social responsibility is a decision not to buy.

As social responsibility and the like become salient to more and more people, they will increasingly function as gating factors for consumer decisions. They will cull the consideration set but not determine the final choice. Which means a dual currency in the marketplace.  First, people must buy that a brand or category measures up. Only then will people be willing to consider it as an option to buy.

Brand marketers are experts in communicating reasons to buy. This is the sweet spot of traditional advertising. Brand marketers are less experienced and thus less adept at deflecting and calming reasons not to buy. But such considerations are of growing importance to people. They want reassurances that a brand is not irresponsible or unscrupulous, even if, ultimately, it doesn’t measure up enough on some key category feature to buy.

The important takeaway here is that social responsibility cannot be ignored or underestimated just because it is not a reason to buy. It affects the purchase funnel in a more fundamental way. To properly appreciate it, social responsibility must be correctly understood. It is not about why people buy; it is about why people don’t buy.

Another way to understand this marketplace dynamic is to borrow a concept from prospect theory, the breakthrough decision framework first articulated by psychologists Amos Tversky and Daniel Kahneman in 1979. One of the two core ideas of prospect theory is that losses loom larger than gains in the ways in which people make choices.  This makes a difference in how consumers make sense of social responsibility and other such factors.

Social responsibility matters most when companies don’t have it. It is a loss which people don’t want or don’t want to be associated. On the other hand, category features are things people gain when they purchase a specific brand. Losses matter more than gains in the ways in which people think, so losses become reasons not to buy. When a loss looms, avoiding it takes precedence, even at the cost of sacrificing other gains. The benefits people gain by purchasing a brand are satisfying only if the losses that matter more are dodged first.

Social responsibility is criticized for little power to drive choices in the marketplace.  That’s because brands marketers are focused first and foremost on why people buy. But to really appreciate the power and importance of social responsibility, brand marketers need to focus instead on why people don’t buy.

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6 Comments

Bryan Floyd on February 25th, 2013 said

What about BP currently? Or historically, Shell? Both gas companies exhibited socially unacceptable and irresponsible actions to which the public reacted. The public did not stop buying gas (the category,) but did they avoid purchasing from these companies until the actions were corrected? I don’t know the data. Your thoughts?

Walker Smith on February 26th, 2013 said

Thanks for your comment Bryan. BP is a perfect illustration of the nuance and complexity in social responsibility (and, indeed, in anything affecting reputation and trust). Prior to the Gulf oil spill, BP had effectively repositioned itself as an environmentally sensitive alternative energy oil company (!) through its “Beyond Petroleum” campaign. Now its corporate reputation is poor and its business has suffered significantly. It has been on a sales tear, divesting assets to survive. And yet, according to the latest (2012) Harris RQ study on corporate reputation, BP showed the strongest year over year improvement, even though it remains low. BP’s biggest reputation gain was in the area of “social responsibility,” and it was the leading gainer year-over-year in that category! Social responsibility is like anything else. You can build, you can lose it, and you can recover it. But it’s rarely factors into the trade-offs between brands in the consideration set. It just keeps brands from being considered.

Rick Steinbrenner
Twitter:
on February 27th, 2013 said

Walker, I agree with you social responsibility is a major contributing factor on reasons why people not buy. However, isn’t there a bigger/more overarching issue on why people don’t buy – could it be because people don’t really want to be sold anymore and are generally distrustful of “brands” extolling their unique selling propositions over competitors or acceptable substitutes? I could argue social responsibility comes under this umbrella….consumers are now smarter, more informed and more skeptical than ever before. In the past, brands could be relied upon to “assure” consumers a product and it features would fill their needs because consumers believed their claims were “trustworthy”. Today, with more robust search technologies, consumers can be informed and stay informed about issues that impact them – including social responsibility. However, I would argue credibility and integrity issues are probably just as important, if not more so. I’ve read recently a poll among 28,000 adults in 21 markets the 3/4 of those people believe big business maximizes profits at the expense of consumers and communities. If this is the case, isn’t credibility and integrity more important for reasons not to buy? Examples for this could include BP for sure, but also could include automotive manufacturers, healthcare providers or anyone who pays lip service to customer service and really limits their exposure to helping consumers solve their problems…Just some thoughts.

Derrick Daye on February 27th, 2013 said

I believe what Walker is saying here is there are lots of reasons people don’t buy. He’s only arguing where social responsibility seems to fit most of the time in the buy-versus-don’t-buy equation, not that social responsibility is the only reason people don’t buy or even the only corporate reputation reason people don’t buy.

You bring up a fair point Rick, there’s a lot more to be said about why people buy and don’t buy. More is certainly welcome here.

Gabe Feingold on March 01st, 2013 said

I work for a brand consulting firm and a large percentage of people respond that it’s very important to them that a brand exhibits social responsibility. However, through regression analysis, in spite of social responsibilities’ stated importance, it’s often not a statistically significant positive driver of brand equity.

In today’s societal landscape, consumers expect corporations to act in a socially responsible manner. Social responsibility is now almost a tablestake; your brand must exhibit it, but it won’t necessarily differentiate you from the crowd. This idea ties really nicely with the article that being socially responsible won’t necessarily make people buy your product, but not being socially conscious when consumers expect you to be, will have negative ramifications on your brand.

Natalie Tommy
Twitter:
on April 25th, 2013 said

Gentlemen, I am a seasoned 30 plus year veteran of a specialty sporting goods retailer, as well as an industry consultant. From the feedback we get, we know social responsibility is expected within our communities, but on the floor the majority of consumers are still choosing not to spend more money on an item just because one company or another is socially responsible. We make the choices to purchase from a vendor based on a number of reasons, of which one is social responsibility. It is apparent that while the consumers are more conscious about the origins of the item and what the brand stands for, what resonates is if we support or create local initiatives that better the quality of life where they live.

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