Consumer Psychology Is The Only Constant In A Changing Retail Market

Posted on 24th Aug 2020

Article by: Pamela N. Danziger

Years ago, Jeff Bezos famously said:

“I very frequently get the question: ‘What’s going to change in the next 10 years?’ And that is a very interesting question; it’s a very common one. I almost never get the question: ‘What’s not going to change in the next 10 years?’ And I submit to you that that second question is actually the more important of the two — because you can build a business strategy around the things that are stable in time.”

He went on to explain that what is not going to change is that customers will want low prices, fast delivery, and vast selection. He is describing motivations that are part of unchangeable consumer psychology on which he based Amazon’s business strategy.

But Bezos’ truths – low prices, fast delivery, and vast selection – address one small part of consumer psychology: consumers’ functional needs. He isn’t telling all he knows about a much more complex story of why consumers do what they do and buy what they buy.

eff Bezos understands consumer psychology
“Shopping behaviors are always a means to an emotional end,” says Buycology founder Christopher Gray, Psy.D.

So retailers need to focus on these core human motivations that shape shoppers’ behaviors. And importantly, these underlying human motivations give other retailers plenty of ammunition to beat back the onslaught of a retailing giant, like Amazon AMZN -0.4%.

“Consumers are people and people are driven by the same core needs,” explains social psychologist Erica Carranza, Ph.D., vice president of consumer psychology at Chadwick Martin Bailey.

“We all strive to maximize positive emotions, enhance and express our identities, cultivate social relationships, and effectively achieve our goals. Because these are core human needs, brands that help people fulfill these needs drive consideration, trial, loyalty, and advocacy,” she says and adds, “People are thirty-times more likely to try a brand if they expect it to deliver strong emotional, identity, social, or functional benefits.”

And people give different weights to these core psychological needs under different circumstances based upon the context in which they find themselves. This year with the pandemic rearing its ugly head, the deck of consumers’ psychological needs got shuffled but never went away.

Here are five essential truths of consumer psychology Bezos isn’t telling about: control (Bezos’ functional needs), emotion, personal identity, social belonging, and context.

Giving consumers control
People want to feel in control and that they can achieve what they want to achieve. In psychological terms, this is called agency. “It’s about their ability to efficiently and effectively achieve their goals,” Carranza explains. “Amazon’s functional benefits give people that sense of agency that they can shop efficiently.”

Consumer behavior is a function of both motivation, i.e. psychological needs, and ability, she goes on to explain. Because of the pandemic – first with so many retail stores closed and now with fears of personal safety looming as stores reopen – they’ve lost some of that agency or ability to shop.

Online shopping has provided consumers more agency in the current context, but there are still psychological challenges to overcome. Retailers and brands have to capture people’s attention online, which is harder to do than when they are in the store already primed to shop. “You’re trying to attract people’s attention, when they’re home attending to something else,” she says.

And then retailers must persuade them to buy. With online shopping cart abandonment rates approaching 70%, e-commerce players aren’t doing such a good job of that.

In the current context, people have many reasons not to pull the trigger, even if retailers have got their attention.

“Why should I buy these shoes? Nobody on Zoom can see my shoes. Why should I buy this purse? I’m hardly ever leaving the house,” Carranza continues.

Activating positive emotions
People want to maximize their good feelings and minimize bad ones. That is the emotional component of consumer psychology, but there are two dimensions that underlie all emotional experiences: valence, or the extent to which the emotions are positive or negative, and activation, or the amount of physical energy associated with the emotion.

In the current context, consumers are feeling lots of negative emotions (valence), which can be expressed (activation) in different ways. Carranza illustrates this by comparing anger to sadness, both negative emotional states, but with different levels of activation.

“Anger and sadness are at opposite poles of activation. When people feel angry, there’s a lot of energy that makes them want to act. When people feel sad, they withdraw. It’s a more of a wearying, debilitating experience,” she explains.

Retailers want to stay on the positive side of emotional valence and encourage more activation of those positive feelings that stimulate consumers to buy. “High activation and positive emotion makes people want to act. They feel energized, excited, and inspired. There is a lot of energy there,” she says.

High activation can keep customers from abandoning their online shopping carts. A sale or limited time offer can be just that, which Bezos knows well. Also important is having an easy, seamless checkout experience, with the promise of trouble-free returns.

Trust is another factor that can activate purchases. If consumers have confidence that the retailer is going to deliver on its positive emotional promise, they are more likely to buy.

“Brands that have built that trust should be leveraging it. Trust falls into that category of emotional benefits. If you trust in a brand, you will buy even if something is a little more expensive.” Luxury and more premium brands play in this space.

Also high in emotional valence but lower on the activation scale are emotions like peaceful, calm, relaxed, comfortable, and secure. As shoppers return to the store, consumers will be needing more of those feelings. So the physical shopping environment will assume even greater importance in the current context.

Reinforcing personal and social identity and belonging
“People want to cultivate a strong personal identity. Personal identity in consumer psychology is about how a brand enhances consumers’ self-image, their pride, and their self-esteem,” Carranza says.

“Personal identity is about helping people feel good about themselves,” she continues. “Then there is social identity or belonging, which is about how strongly people identify with the kind of person who uses that brand or shops in that store.”

Traditionally fashion brands have played in this space, with the choice of a fashion label both reinforcing one’s personal identity and aligning one’s self to a group or tribe with shared values and aesthetics.

“Social connection is so important for retail, whether it’s the literal coming together in the store or the purchases made through retail as a form of social expression, like carrying a Louis Vuitton purse that provides both a personal and social psychological benefit. It makes people feel like they belong to a community even if they’re not in the store,” she explains.

She also notes that Amazon with its 150 million Prime members has done a good job in satisfying both personal identity and social belonging benefits. “Amazon customers tend to feel like lots of people like them use Amazon and they can identify with those people,” she says.

Context shapes consumers’ perception
And finally, across these stable consumer psychological motives – control, emotion, personal identity, and social belonging – comes the ever-changing context in which the consumer operates.

“Context shapes how we perceive the environment, the conclusions we draw from it, and the emotional responses we have to it,” says Buycology’s Gray.

“Motivations remain the same over time, but the means consumers use to satisfy those motivations can change. By understanding those underlying motivations, retailers have the ability to provide new options to shoppers that meet those needs,” he continues, pointing to the rapid adoption of buy-online-pickup-in-store as an example of that.

With so much social and emotional turmoil bombarding shoppers today, the mission of a retailer or brand and its stand on social issues has taken on even greater importance. “Brands need to stake out an energizing mission,” Carranza stresses.

And because of the stressful context in which people find themselves, it calls on retailers to pay more attention to the less activating, but more emotionally-reassuring good feelings Carranza talks about, specifically creating a peaceful, calm, relaxed, comfortable, and secure physical environment.

“It is really important for retailers to go overboard in creating a context that is positive, friendly, welcoming, and safe,” Gray says.

This is complicated by the need to wear face masks in stores. Face masks eliminate people’s ability to read facial expressions that are so important in the social context. This can be overcome by more vocalization that communicates friendliness, like a laugh, and more expressive, open body language, such as friendly hand gestures and no crossed arms.

“A positive emotional response in a shopping environment leads to increased time spent in store, increased spending, increased basket size, and increased desire to return. On the other hand, a negative experience, like frustration or anxiety, are antithetical to a positive shopping experience and leads to shorter time spent in the store, less spending, and less desire to return,” Gray share.

In conclusion, consumer psychology – giving people control, activating positive emotions, reinforcing personal identity and belonging – is the unchangeable foundation on which to build a winning retail business strategy, all the while being ready to adapt expeditiously as consumers’ social and cultural context changes.

Note: Correction made to statement above, “People are thirty-times more likely to try a brand...” Original stated incorrectly three-times; corrected to thirty-times, at 4:05 p.m. August 23.