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Tuesday, April 17, 2012

Why do we buy things?

I often think about how to create new things and why and how people adopt new things. The core of why people acquire new things can be narrowed down to four basic human attributes (to see how adoption occurs click here). These attributes have been with us for centuries. And, if we really understand these attributes well then not only we can position products well in the market but also design products which have better chance of being adopted. The four attributes are: 

1. Sex (evolution) 
2. Attachment 
3. Identity 
4. Laziness 

Let's call it the SAIL model and let's dig deeper into each SAIL attribute. 

1. Sex: Most people are genetically programed to be attracted to the opposite sex. Evolutionarily speaking, reproduction is one of the main purposes of life. We see how the dynamics of sex-appeal work in advertising and movies. Just think why do we have supermodels? Why don't the advertising agencies take any average girl to communicate the features of the product? Men like attractive women so we buy things which are associated with attractive women. Charlie Munger describes this well in his human misjudgment tendency #10. Sex appeal to women works in different ways. Subconsciously, women do a lot of things to become more attractive to men. Just think why are so many women are walking around in high-heels which is painful.  Because the high heels make the women walk in a way that men find attractive. The dynamics of finding a mate are very interesting. You can read more about that here. Why do we wear clothes that show a label or carry a bag that shows a label? You are doing free advertising for a company. Evolutionarily, it is to send a message to the other sex about your status and become more appealing and a message to the same sex to show superiority since (evolutionarily) you are competing with the members of the same sex to get a mate. Somehow, these behaviors don't go away even after you have found a mate. It maybe because a lot of marketing/social conditioning goes into  'keeping your mate happy with diamonds' or other items  to ensure love lasts forever keep buying nice/luxurious things. 

So, the idea is that if a product makes you more appealing to the other members of the sex and/or makes you appear superior to the same members of the sex then it has good chance of getting adopted. Think of the designer brands, PradaGucciLouis Vuitton, etc and luxury cars like Mercedes or BMW. And, simple things like shampoo, deodorants, wrist watches, matches, etc. The popular ones are the ones associated with popular male and females. Of course, execution on this is complex. You have to think of target segment, advertising strategy, pricing, competition, etc. etc. However, if you consider sex appeal during the product development phase and find a way to position the product in market that appeals to evolutionary sex side of humans, you can increase the chances of adoption.

2. Attachment: We spend a lot of time and money in getting attached to things, people, and animals. If the buying process leverages our attachment then the products have better chance of being bought. For example, sales and deals. People buy things they don't need just because these things go on sale. And, during the purchase process, people think of the the money they are saving and not about the money they are spending. E.g. if a dress that was $200 and you buy it on sale for $50 then you would get very excited about saving $150. The reason is that we are attached to money. Jewelry is another example, men spend a lot of money in buying jewelry for women and the price of the jewelry signifies how attached the man is to the woman.  Then there are things you buy for the things you are attached to. For example, people love their iPhones and they spend $30+ on plastic covers for their iPhones. People love their children so they buy the best possible things for their children. A kid does not know that s/he is riding in a Bugaboo stroller. 

So, if you are creating a new product think about how you can leverage attachment. And, when you are planning a marketing campaign, think about how the messaging could be associated with attachment. 

3. Identity: Who am I? This question drives a lot of our lives. Search for identity is part of making people religious, patriotic, hard-working, and many other things. When you meet new people what do you ask them? Where are you from? What do you do for a living? These questions are related to finding a new person's identity. Culture heavily influences identity. For example, in the US, what you do for a living maybe very important. In Europe, where you are from maybe important. And, in India, what class you are from maybe important. Similarly, identity also comes from the groups/communities you belong to. These maybe the local church, the rotary club or the country club, etc. People are nicer to people with similar identity. Somehow, there is a desire in most people to show that they are unique and at the same time part of a bigger group. So, people want to identify with a group that is exclusive and/or represents what they believe in. Sports is another example of identity. People are ready to kill people from another team. They spend a lot of time and money in supporting their teams. What exactly do you gain if your team wins or loses? 

The power of marketing is such that people start defining themselves with products. You may have heard of the famous cola challenge/experiment in which if people are not told which cola they are drinking and most people preferred Pepsi over Coke. However, if people are told which cola they are drinking then most people preferred Coke over Pepsi. Why is that? People start associating who they are with the products they use. You can say the same thing about cars, iPhone, and even coffee. Search for identity is continuous process in people's life. It is a fine art to create that balance between exclusivity and accessibility. So, when creating a product/service, think about how it could become part of a person's identity. 

4. Laziness: People are lazy by nature. If you don't have to do anything, most likely, you won't do anything. We always find ways which require less effort to do things. Most people don't like to work. They do it to earn money which they can use to buy things. The four hour work week is a popular book. When was the last time you typed a complete address in the address bar of a browser? We just search for the site on Google because it is easier. My car has automatic headlights, automatic windshield wipers, the position of the car seat is in car's memory and I love not being required to press a simple button. And, I probably paid thousands of dollars for these features these features make me more lazy. Obesity is becoming an epidemic. Probably the only time we love physical activity is when it is satisfying one of our senses. And, it is not just physical laziness, we love mental laziness as well i.e. we want to think even less. How many investors do you think read the 10-K of companies, talk to customers of companies they want to invest in or to the management of the company they want to invest in? 

In marketing speak, laziness is called making life easier or convenience. The whole mail-in-rebate system is based on  monetizing people's laziness. I am not sure what the numbers are these days but a few years ago only 17% of the people actually mailed the coupons to get the rebate. Why do we love our Smartphones? Because it is easier to do things on the Smartphone than booting up your computer and taking the extra step. In the online world, the sales are directly proportional to the number of clicks people have to make before they make a purchase. So, when designing a new product/service, think about how it can make an individual feel more productive without requiring much effort.

Following the SAIL model you can increase the odds of your product being widely adopted.