Use 'Neuroeconomics' to Influences Buying Choices

Much to the on-going frustration of kitchen and bath professionals, customers can’t reliably explain why they make the choices they do. Custom glazed, full-overlay cabinets versus stock oak, or the basic chrome faucet over the stylish Italian nickel? Home center or designer showroom?

Asking consumers doesn’t do much good, though, because the answers you get are not particularly accurate. It’s not that consumers want to mislead. But, because their decisions are made primarily on a subconscious or pre-conscious level, they truly can’t articulate the reasons behind them.

In fact, scientists now estimate that anywhere from 90% to 95% of brain activity is subconscious.

Two new fields of study are helping marketers better understand their customers on the all-important subconscious level. Neuroeconomics studies the biological basis of economic behavior by, among other things, noting through scans which brain areas are active in certain decisions.

An outgrowth of neuroeconomics, the concept of neuromarketing was developed by psychologists at Harvard University in 1990, with the term “neuromarketing” coined in 2002. Neuromarketing studies consumers’ physiological responses to marketing stimuli.

While the field is not without controversy, companies such as Google, CBS, Coca-Cola and many more have used neuromarketing to better understand how to reach their customers.

In the book Brainfluence, Roger Dooley provides an overview of key findings in the field and reveals “100 ways to persuade and convince consumers with neuromarketing.”


Relevant Findings

Here are just a few of the findings that are particularly relevant for our industry as we seek to first appeal to consumers’ emotions and unconscious needs.

• Buying can cause the pain center in the brain to light up. Brain scans can predict consumer purchasing without even asking subjects if they are going to buy. By seeing whether the prospect’s pain center was activated, researchers could anticipate whether there was going to be subsequent buying activity. Pain, though, is relative and a lot of it depends on the perception of whether a price is fair.

And that, in turn, can depend on the context of the transaction, among other factors. In a designer showroom, consumers may well think the four-figure price tag on a faucet or sink is fair, but perceive the same item at the same price as unfair in a big box store.

Overcome pain by anchoring the price. When buying unfamiliar or rarely purchased items, we form an anchor point or an idea of a fair price at the time we start thinking about the purchase, Dooley explains. If you show a $100,000 project, you have set a high anchor. “Adding a very expensive option makes the second option look more reasonable. Increase your top of the line business by adding an even higher priced model,” the author suggests. i.e., sell more $80,000 projects by showing more $100,000 ones. And to minimize pain, “if your product is more expensive than others, take the time to explain why it is a premium product,” Dooley advises.

Overcome pain by bundling. The appliance companies do this well, with a combo price for range, refrigerator and dishwasher, rather than causing the repeated pain of multiple individual purchases. This same principle could be applied to a package of cabinet storage aids, a sink convenience center or bathroom accessories. Overall, it’s less painful to present one all-inclusive price, and then go into details.

Some people feel spending pain more than others.A quarter of your potential customers may be particularly challenging to sell to,” Dooley cautions. Tightwads, who comprise about 24% of the market, feel more pain on buying than others. When dealing with them, emphasize the fairness of the price and the value, such as dollars per day or year. They respond well to bundling. And they respond better to the utilitarian rather than the hedonistic. So, if you’re talking about a steam shower, emphasize the health benefits. With appliances, underscore energy efficiency and ease of use. Talk about the convenience of interior storage aids.

Others feel less spending pain. Spendthrifts, about 15% of the market, feel little pain on spending. Which is good news, except that you are competing with a lot of other unrelated temptations such as luxury cars, vacations, jewelry and more. Spendthrifts respond to the fun and pleasure of the experience of a new kitchen or bath. Talk about relaxing in a spa bath, or enjoying the wine refrigerator when entertaining. Don’t leave out the utilitarian but combine it with the fun.

People enjoy a product more when they pay more for it. This seems counterintuitive, given the buying = pain scenario, but studies have shown the pleasure center of the brain lights up more when people drink a wine priced at $40 than when they drink the same wine priced at $10.

“We know the pain of paying kicks in when people perceive a product is overpriced, but price is an important part of the experience for a premium product or luxury brand. Discounting may actually reduce the quality of the customer experience,” Dooley warns.

Precise prices are perceived as more fair. Actually the better way to price the wine would be $39.99 or $9.99. This is because people believe the odd price is more accurate, or has some rationale behind it. Keep this in mind when pricing your projects or products.

Help your customers choose. “Choosing between two equally attractive options irritates customers due to the difficulty of choice,” says Dooley. “But if you give your customer a clearly less attractive option, the choice is easier and more pleasurable. Instead of good, better, best, try not-so-good, better and best. Avoid similar choices; instead show meaningful differences that customers can rapidly appreciate.

Fewer choices mean more sales. Making choices tires the brain, the author warns. Re-think that mind-numbing wall of faucets, sinks or hardware. Get rid of poorly selling items. And be prepared to guide consumers through the bewildering choices by helping them through decision stress. Single-handle or widespread? Contemporary or traditional? Chrome or oil-rubbed bronze? The easier you make the choices, the easier it is for your customer to make a decision. And isn’t that what they, and you, want?