What makes a Customer Buy Your Product?
Businesses are a vital cog in the wheels that make the economy run. They are perpetually hungry for growth and thirsty for cash flow. Always scouting for expansion of their customer base, it is imperative to understand how to identify a target market and subsequently capture it. In order to arrive at that destination, we first must understand why businesses invest heavily in understanding customer mindsets.
How does a customer decide to make a purchase?
The above graphic is known as the AIDA Model or AIDA Funnel. The open end of the funnel is the entire universal set of consumers and at the bottom end is the target market of the enterprise.
Identifying consumers willing to pay based on the AIDA Model:
Identify the Gap you want to bridge:
When a consumer first gets apprised about a product, (s)he is looking for the product to solve his / her particular problem. It is critical to identify and service this need in order to attract customers. List out the features of your product / innovations that will satisfy this need for the consumer to make them AWARE about your offerings.
Evaluate your current consumer base & competition:
If consumers buy from you once, they hope you’ll service their need. If they continue to buy your product, they are satisfied and trust that you will successfully bridge the gap they’re facing.
This is where it becomes important to know who is competing with you and how effectively are they able to retain their consumers. If your product offers better features and reliability, you have a chance to vulture upon that additional consumer base. Make heads turn towards your product and ignite INTEREST.
Take account of the demographics you target and psychographics of that target market:
Here’s what each of them encompasses for consideration.
It is important to dig deeper into these nuances since they all influence consumer behaviour. A specific target market helps narrow down consumer interests thus enticing them and sparking a DESIRE to purchase your product.
The best example of consumer behaviour based on demographics is Amazon Prime. Research data indicates that age and annual salary are the biggest influencers of a subscriber’s willingness to pay (WTP). Amazon Prime has successfully kept up with changing WTP. In 2014 it was priced at $7.99, later raised to $9.99 and then pushed to $12.99. This simple implementation took them from $95.88 to $119.88 to $155.88! The first jump helped them capture most age brackets.
Evaluate the combination of metrics carefully and Decide:
Upon recognition of a specific segment of the consumer market, few things remain to be scrutinized thoroughly such as:
- Affordability of the product
- Drivers for purchase decisions
- Will the buyer benefit beyond his expectations?
- Is the market accessible and open for a new entrant?
If all the above steps mesh together in synergy, you have successfully solved the puzzle with the introduction of your product. The human propensity to spend on innovative products is driven by the above four toothed gear.
It is also possible to service multiple strata of society with the same product or by minutely tweaking the product to service the second cluster – AS LONG AS CONSUMER NEEDS ARE EFFECTIVELY SATISFIED.
One of the best examples of serving multiple clusters with one product is Spotify. Based on research data, Spotify users are willing to pay in the range of $5 to $15 for their monthly subscription. This indicates that there is potential to introduce pricing tiers which Spotify did with their family plan.
The consumer is king and long live the king!
Voracious reading regimes coupled with a penchant for writing led me away from a glamorous yet mundane corporate career. When nobody's calling, the mountains always are - you'll invariably find me atop one.