Making Better Decisions by Understanding Buying Behavior — Part 1

NEVER ENDING PROBLEM

How many times did you end up buying something that wasn’t worth it in the end?

I know I did. I can’t even remember how many times it happened.

Did you ever buy something for a cheaper price, just to have it confirm its price later by breaking or not working anymore, and then having to buy the more expensive one anyway?

We all had this problem at one point or another.

I decided to break this subjects down into 3 chunks of digestible information in order to give it the necessary attention but also to make it easier for our brain to take in the information and process it properly.

You don’t have to worry, I’m not going to be as boring as the textbooks that try to teach you 1 thing in 300 pages or 600 things in 300 pages. There has to be a good mix of what we actually need to understand and how much you have to write in order to prove your point.

The truth is that understanding and learning how to make better buying decision is a skill that can bring significant long-lasting benefits to our quality of life.

INTRODUCTION TO HUMAN BEHAVIOR

For example, the first time I was introduced to human behavior, more specifically buying behavior, was in my 1st Bachelor year, and that’s just because I was studying Marketing.

Does that mean that a finance student or a law student doesn’t really need to understand his own buying decisions?

It seems as if this is how the real world works.

That is why most of what we know, should be learned by what we consume on our own, be it through books, videos or a blog post like this one. It is up to us to select what we want to learn in order to better understand other people, but most importantly, ourselves.

It took 19 years until I was introduced to this concept for the first time.

Does it seem reasonable considering we’re making buying decisions before we even go into a classroom?

Doesn’t seem like it.

We receive education in the fields of math, science, biology or chemistry way before we even get a glimpse of the most complex system, ourselves.

Isn’t it easier to use something properly after we understand it?

Can anyone drive a car or do you first need a driving license?

Can anyone be a pilot or do you need special training?

Can anyone be paid $10k for his first public speaking appearance or first do you need to gain experience and credibility?

If the answers to all of these are the latter, then why would we expect us to make good buying decisions if we don’t understand how our mind operates in this situation?

As previously mentioned, the human mind is a complex system and we don’t have to understand every aspect of it, but there are few specific things we can learn in order to significantly increase our quality of life, with a minimal amount of required effort.

Understanding how we make our buying decisions is one of them.

THE BUYING DECISION PROCESS

Now let’s look at how the buying decision process looks like, step by step.

There are only 5 steps in the buying decision process.

#1 PROBLEM RECOGNITION

This is the gap between what you HAVE and what you WANT.

One great example in today’s social media world is boredom. Social platforms have become the addictive solution to this type of need we have.

Problem: Boredom

Solution: Social Media

#2 INFORMATION RESEARCH

At this point, we are seeking information and researching our possibilities.

It can either be from your own memory or from external sources.

If we’re talking about social media it’s clear we don’t have to do much research, do we? The answer is already implanted in our head.

#3 EVALUATION OF ALTERNATIVES

Now that we found some solutions, we can compare them.

Usually, at this stage, we can go back to step #2 and do more research. It is a good time to go deeper and make an in-depth analysis in order to compare our initial choices and select the one we see as the optimal solution.

Going back to the social media example, alternatives would be the many choices we have. It could be Facebook, it could be Instagram, it could be Snapchat, so our brain will look for what is more pleasurable at that particular time.

#4 PURCHASE

Finally, the good or service can be purchased.

The only thing that has to be taken into account is the place of acquisition.

Social media has become so easy to access that wherever you are (yes, even while sitting in the toilet) you just have to get your phone out and tap 1–2 times before accessing your favorite platform. At that point, we “purchase” their service, by entering it and giving it our attention.

#5 POST-PURCHASE BEHAVIOR

At this point, the product or service has already been used.

Depending on how it made us feel, there are 2 main emotions that we’ll experience:

• Satisfaction
• Disappointment

Well, considering social media, it’s clear that you get satisfaction from accessing it, otherwise, you wouldn’t do it repeatedly, would you?

As you can see, the process isn’t that difficult and it’s not hard to understand its logic.

BACK TO THE REAL WORLD

Concepts are usually not that sexy on their own, are they?

However, it does seem pretty simple when you look at it as a step by step process.

Do you have to remember it?

Definitely not.

There is always a better way.

You know what works better than concepts and theories? Examples.

That’s why we can have a look over a simple example which we all have to face, and compared with social media, we actually have to pay for, more or less.

The example involves one of our daily necessities.

Hydration.

This is a basic human need and we can all relate to the feeling.

It makes for an easy example to go over, step by step.

#1 Problem recognition

You are thirsty.

#2 Information research

What do you usually do when you’re thirsty?

You drink something.

Our own memory tells us this without much thinking.

If you remember, there are also external sources of information. So if you look up on Google “how to hydrate yourself”, you’ll see that there are other solutions as well. Among them, we can even find eating as an option.

Now, as you can see, research can get complex if we don’t know exactly what we want.

This is why we can already simplify our work by just looking at liquids.

#3 Evaluation of alternatives

What options do you have?

Well, some water might be nice. However, this is where our buying decision is influenced by many different factors.

Water is ideal, but Coca-Cola has spent billions of dollars to influence your buying behavior through different methods.

Do you remember seeing commercials where people were drinking water and having such a good time that you’d want to join them?

Me neither.

This is where our emotions come into play. I will cover this more extensively in the 3rd part of this blog series since it is actually the most important part and it deserves more attention.

#4 Purchase

After you’ve decided, it’s time to buy.

You can buy a bottle of water or you can buy a bottle of Coke.

Either way, you will pay a price, which will be different depending on your solution.

There’s also the possibility that you’ll just satisfy your need with tap water, in case you are home. This is not free either, but it’s the lowest cost option and the most convenient for the actual need.

#5 Post-purchase behavior

Now you’re not thirsty anymore, you are satisfied and the problem was solved.

As far as the NEED, it was satisfied, but how about the WANT?

This is a different story since they are not one and the same. We’ll cover this later in this blog series since it needs more attention. Right now we can go back to our decision of hydrating ourselves.

The decision of what to drink might seem small at first but let’s have a look at the difference between picking water and picking a coke down below.

THE IMPORTANCE OF REPEATED ACTIONS

As you can see in the example above, one choice was the “good” healthy choice and the other was the “bad” unhealthy choice.

The same need was satisfied, but the outcome is not the same, especially for our body.

Over time, they add up and at the end of the day, we are the result of what we do repeatedly, again and again.

Our decisions shape us.

Let’s imagine the following scenarios:

1. You never save a penny.

2. You save at least $1 every day by making your own coffee.

Which scenario saves you $365 at the end of the year?

Let’s imagine another scenario.

1. You don’t go to the gym at all.

2. You go to the gym 2 times a week.

Do you think that after 104 visits to the gym in 1 year, you might look better and be healthier than not going at all?

Let’s imagine one last scenario:

1. You never send a message to your friends unless you need something from them.

2. You always share some interesting information you stumbled upon with your friends and see what they are up to in their life, maybe you can help.

Which one of these 2 versions would you rather have as a friend in your life?

This is why we hear the phrase “the rich get richer, the poor get poorer”.

A good decision reinforces another good decision.

A bad decision reinforces another bad decision.

Why do we see so many popular movies where a weak person becomes strong, a lonely person makes friends and a grumpy person becomes caring?

This is because it is so rare to see someone changing from a bad decision maker, to a good decision maker.

Did you ever hear about the snowball effect?

Imagine a small snowball that is rolling down a hill.

The snowball effect is basically the concept of growth over time.

A snowball going down a hill starts small, but while rolling, it becomes bigger, building upon itself.

The same applies to our lives.

All the examples mentioned previously are examples of this effect.

They all seem logical, don’t they?

• If you water a plant daily, it will grow.
• If you feed a baby daily, it will grow.
• If you study every day, you will know more.
• If you write every day, you will write more.
• If you save every day, you will have more.

Doing the right things seems so easy, doesn’t it?

You just have to do what you know is right on a consistent basis.

Small and seemingly insignificant decisions are just as important as what we might think are major decisions. They are not all equal, but they all can grow or shrink the snowball we might want to build in a specific area of our life.

All of this sounds good, but we are all different, aren’t we?

That’s exactly right.

Not all of us take the same decisions and that’s actually how it should be. Otherwise, the world would really be a boring place to live in.

Each of us is different, but there are a few things that all of us should take into account when making decisions, especially buying decisions.

That is why, in our 2nd part of this blog post series, we’ll take an in-depth look at:

• what type of buyers we can be
• if we find ourselves in the right category
• if we should consider shifting to another category for our own benefit
• human emotions

This is all for this 1st part. I do hope you were able to enjoy it and get some real value out of it.

If there is anything you agree or disagree with, you can comment down below. Unless the comment is inappropriate, you will get a reply from me. :)

If you want to see the original post with its own formatting, you can do it by clicking here.