An Entrepreneurs Guide to Understanding Why We Buy What We Buy. Understanding Consumers.

26 SEP 2009

by Doug Richard, Founder of School for Startups

Anyone who has ever watched me on the Den, or at one of my S4S Surgeries, knows that I have certain questions that I expect entrepreneurs to be able to answer.  Who are you? What does your company do?  Who are your customers? What problem are you solving for them? How does your product meet their needs? How will your customers find your product and buy it? Who will sell it? Who will deliver it?  It is surprising how many people never get past the first two questions.

From these questions it may seem that I think customers routinely make well considered and rational choices about the products and services they buy, that I’m asking these questions because I think these are the questions that customers ask.

Nothing could be further from the truth.  I’m under no illusion that Burberry coats are purchased by people who have done a careful study of all competing overcoats and have, upon long reflection, decided Burberry is the appropriate choice. In fact, I know customers almost never ask these questions. Burberry, like Coca Cola, is a brand that has successfully imbued itself with a promise to the wearer that anyone who sees them wearing Burberry or drinking Coke will understand that they are the sort of people who wear Burberry and drink Coke and all that that implies; whatever that, indeed, implies.

Chances are good that you buy the breakfast food your mother used to make you when you were a kid. You buy shoes based on what you think looks “fashionable” rather than comfort or sturdiness.  You choose what car to drive, what day care to send your kids to, and what home to purchase for reasons just as ephemeral and poorly understood. In a sense, a good product that meets a real need is just the opening ante for an entrepreneur.  It’s the very least you need.  When I ask these questions, I’m confirming that an entrepreneur knows he has a customer, that he’s knows his customers needs, expectations, his buying habits and the competition.

Knowing the customer inside out is almost more important than having a good product.  In fact . . . having a good product is occasionally completely optional . . .

In 1928, George Washington Hill, President of the American Tobacco Association, hired the The “Father of Public Relations” Edward Bernays, to make women start smoking cigarettes.  There was, in the 20′s, a considerable taboo against women smoking.  It was thought to be vulgar and manly(perhaps a bit redundant).  Edward Bernays contacted a bunch of débutantes who were scheduled to march in the 1929 Easter Parade in New York City.  He asked them to carry cigarettes sequestered on their person and, at a signal from him, to light up during the parade.  He told them they were making a statement about the equality of women and their right to be like men. He said they had as much right to smoke as a man. Their cigarettes were “torches of freedom.” Bernays told the newspapers that suffragettes were planning to infiltrate the parade to make a statement about the equality of women.  The rest is history.  Everything went as planned and woman began to smoke by the millions.

Even more extraordinary, anyone who felt strongly about the equality of women was co-opted into Bernays invidious plan and felt compelled to support womens’ right to smoke! We now know that cigarettes are one of the most harmful products of the modern era. But at the time, that was neither here nor there. And the story seems peculiarly Machiavellian in hindsight.

But we live in a world that has inherited the extraordinary shift to a consuming public that buys in large part on desire rather than need. Bernays understood that our sense of self is in part made up through the eyes of others around us. We become the sum of how we are perceived.  And our subconscious response is to adorn ourselves with brands that signal to everyone else how they should see us, so we in turn can see ourselves the same way.  Bernays was a master at assigning to products values whether it was notions of equality tied to cigarettes or independence to cars.

An entrepreneur may start with a great idea based on a remarkable insight, he may produce truly exceptional products, but it is paramount that he know his customer’s needs, his buying habits, his expectations, how he sees himself and why he buys what he buys. He must be able to explain, and hopefully demonstrate, why the customer will buy.

I believe we can do well and good. But I am very conscious of that fact that it is very common for people to innocently wrap their products with values that may enhance or limit their products’ appeal.

For more insight into why people buy things, and the practitioners whose work built the world in which we live, look up the work of Edward Bernays online (http://www.bookrags.com/biography/edward-l-bernays/).  He worked his strange brand of magic for more than 60 years for some of the worlds largest and most profitable businesses. There’s a great deal you can learn from his work.  For more information about School for Startups, our classes, our online TV station and our other resources, visit www.schoolforstartups.co.uk.

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  2. “Knowing the customer inside out is almost more important than having a good product”
    –> True!

    Research and funding are the 2 mains difficulties that have entrepreneurs!
    Most business start-ups don’t do enough research before starting their company because of a lack of money and because they think they don’t need to.

    The thing is that doing good, custom and precise research will enable you to get more funding because if you have some relevant figures, statistics from your target market, your potential customers, then investors, bank…etc… will trust your project.
    And I’m talking about real primary research, not the obvious good feedback from your family circle!
    And no it is not only dedicated to rich big names, definitely affordable to small budget!

    Have a look or feel free to ask for more information.
    Good luck to all!

    Eric
    Marketest

  3. Thank you so muchfor the info… I really appreciate it. I have bookmarked your site and will be back.

  4. Have you got any advice for when I should use this?

    • This article is useful for those who have a great product or service that they can’t seem to get people to buy. While they may have a great innovation, and good “packaging” around that innovation that makes it fundamentally practical/useful . . . they may not have invested enough time or thought into how that product or service fits the customer. That’s like designing a glove without knowing anything about the hands they are supposed to fit.

      Work gloves, driving gloves, pot holders, mittens . . . millions of things go on the ends of hands. But to get people to buy a given set of gloves you need to know who they are for, where those folks will be shopping for them, what they expect for that kind of glove (waterproof? cheap? smooth? soft?) and often something about the emotional context for that product. (Fedex: When it absolutely, positively, has to be there overnight . . . speaks to every single one of us who has suffered insane misfortune because something didn’t get where it had to be).

      So you use this when your product or service isn’t selling and you don’t know why . . .

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