Thursday, February 8, 2018

Habituation and Inertia

Retailers have always looked for techniques to provoke customers to spend more or purchase higher-margin items – but much of what has been done thus far are merely pseudo-psychological “tricks” based on specious theories and scant evidence.   It is only within the past few decades that computers are powerful enough to handle the calculations, and “reward card” programs enable retailers to recognize the buying activity of individual customers, that any real science can be applied.

It’s also observed that most of our buying behavior does not involve decision-making. It’s habitual.   When we purchase a product for the first time, there is intense thought and scrutiny – but if we are satisfied with the outcome, we tend to purchase the same brand automatically the next time, and the next.   People remain “loyal” to the same brand for decades not because they repeatedly re-evaluate their options and find that a given brand is superior ever time, but out of laziness” they do whatever seemed to “work” last time to avoid the effort of decision-making.

However, this analysis considers the point of decision, which loses context of the shopping behavior.   The decision of “Brand A or B” is an event made in the context of the shopping excursion – everything that led the individual to be standing at that particular shelf at that particular moment to make that particular decision – and all this must have taken place for that decision to be relevant at all.

Consider this: people fall into patterns for habitual purchases.   A person may have fallen into the pattern of doing their grocery shopping at a particular store.   Beyond that, they have developed the habit of using a shopping list, pre-making many of their buying decisions before they even arrive at the store.   And beyond that, they pattern they take as they proceed through the store, gathering items, is also subject to habituation: a carefully-considered trick to cause a person to purchase your brand of multivitamin is totally missed by a consumer whose weekly routine doesn’t involve walking down the vitamin aisle at all.

To their current brand of preference, the habituation and inertia of the market is an asset: once a customer has become habituated to a brand, it is very difficult for anyone else to break that habit and take the customer away.    This is also a strategic advantage to established brands, in that the cost and effort required to break habitual patterns is significantly higher than that required to maintain them – which is very often zero, but it generally takes no effort on anyone’s part to cause things to remain the way they are (if no-one is putting any effort into causing them to change).

The corresponding disadvantage, however, is stagnation in the marketplace: while the established brand can rely upon inertia to preserve their market share, they must disrupt this inertia in order to gain market share, and any act of disruption for the sake of growing into new markets or acquiring new customers jeopardizes the stasis required to maintain existing ones.   That is, the change necessary to break the non-buying habit also has the tendency to break the buying habit.

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