4 factors influencing consumer decision making
When analyzing the factors that influence consumer decision making, one needs to look no further than the four Ps of the marketing mix: pricing, promotion, place, and product. With competitive pricing, strong promotions, optimal shelf placement, and a good product, brands can be assured of their success. However, optimizing all four of these components isn’t always possible when brands focus strictly on traditional marketing methods. Instead, brands will need to look to digital innovations to elevate their marketing mix.
Mobile shopping apps, rewards programs, and digital marketing tactics can all be used to close the gap in these spaces. They can guide consumers to products, make them more appealing for purchase and help them stand out among competitors in the shopping aisle. By leveraging these tools to direct consumers, brands can close sales and increase their market share.
How Digital Marketing Impacts the Factors Influencing Consumer Decision Making
Factors within traditional marketing that influence consumer decision making have not changed very much, but the way brands leverage them has—thanks to advancements in digital technology. In the past, brands would rely on celebrity endorsements, new and improved product formulas, premium shelf space, and steep discounts to drive sales. However, these all have drawbacks as they often fail to offer a reasonable ROI based on their overall expense.
Digital spaces help brands enhance all parts of their marketing mix through more cost-effective strategies. Traditional discounts are offset by rewards. Everyday shopper recommendations on social media provide word-of-mouth marketing that outperforms celebrity endorsements. Mobile apps can direct consumers to products in the aisle and brands can differentiate their products not by changing them, but by marketing them in a new way. Here are four ways that brands can use technology to leverage the factors influencing consumer decision making.
#1: Reduce Reliance on Discount-Based Pricing With Rewards
While price will likely always be a vital factor that drives purchase decisions, it’s not the only component consumers take into consideration. Quality, sustainability, and convenience are also crucial motivators that encourage consumers to buy. Aside from that, steep discounts actually have some opposite effects when it comes to improving sales. Some to consider include:
Competing with white-label or private-label brands is often a challenge for most large, household name CPG companies looking for long-term, sustainable results. Brand-name companies typically have higher overhead costs, meaning it’s not as easy to offer cut-rates on products and maintain profitability.
Reduced perceived quality:
There is a direct correlation between price and quality perception. Typically, the lower the price, the lower consumers view the quality of a product. Often, quality is a deciding factor for consumers choosing CPG brands, so using steep discounts could actually deter them from buying.
Discounts may be good for gaining one-time users, but they’re not typically strong for creating ongoing customer relationships. Discount-driven consumers will usually switch to a cheaper product as soon as the price goes back to normal.
Discounts can be a decent strategy for brands that wish to improve sales, but relying entirely on them is a mistake. An alternative to discount-dependence is rewards programs. In such programs, consumers receive points which can be redeemed for gift cards and other items. Through the reward, the consumer gets the value-driven experience they crave, while brands gain the sale without having to offer an immediate discount. It’s not uncommon for consumers to even view those rewards as having a higher value than their simple face amount, as there is an emotional return for receiving them.
#2: Direct Consumers to the Right Place With Mobile Apps
Approximately 96% of consumers who visit a mass merchandiser or grocery store make at least one CPG purchase. This makes shelf space and visibility absolutely imperative in gaining sales. However, premium shelf space is finite and can be expensive when dealing with retailers who use “slotting fee” systems where brands must pay for their space in the store. An alternative to paying those high fees or fighting for space is to use mobile shopping apps to direct consumers to products.
This is a strategy Shopkick uses when improving in-store sales for partners. A leading cleaning product brand partnered with the mobile shopping app with a goal of increasing in-store purchases. The campaign featured branded greetings when consumers arrived at a participating location, putting the product at the top of shoppers’ minds upon entry. By awarding consumers with kicks (reward points) for scanning the brand’s products with their smartphones, Shopkick was able to drive shoppers right to the product at shelf and incentivize interaction and purchase. Following their choice to contact Shopkick, the brand saw an overall 92% increase in purchase conversion on days when the promo was in effect. In addition, 52% of purchasers reported they were driven to try the product due to the content they saw in the app.
Mobile shopping apps have a strong impact when driving in-store sales as they encourage consumers to seek out specific products. Even premium shelf space can’t get consumers to do that, as they may see the product but never handle it. Shopkick’s strategy leverages priming by encouraging consumers to physically touch the product, which instills a sense of ownership and increases sales. Of course, not all mobile shopping apps are created equally. To leverage this strategy in the shopping aisle, brands must seek out an app which:
Gamifies the consumer experience:
Gamification, or turning an everyday exercise into a game, engages consumers during their shopping journey and encourages them to participate. In Shopkick’s case, the app works like a digital scavenger hunt. This makes the experience fun and keeps user retention high.
Rewards them for participating:
Rewards need to tread a thin line between offering affordability for the brand while providing enough of an incentive that the consumer believes the app is worth it. If consumers feel it is too hard to obtain these rewards, they’ll likely stop using the app.
Engages them with pre-trip ads:
While most purchase decisions are made in the shopping aisle, brands must still prime consumers for sale before they reach the store to gain the best results. Using an app that allows them to view digital content like mobile video can ensure the brand is top-of-mind both before and during the consumer’s shopping trip.
Mobile apps allow brands to gain an advantage in the store and engage consumers on a deeper level. Not only can this increase sales, but it can also help boost brand affinity and encourage ongoing product loyalty.
#3: Carefully Cultivate Influencers to Promote Products
In the age of social media, brands are now turning to influencers to help endorse their products. These individuals have massive online followings, which many brands leverage to drive sales of their products. The assumption is that the right product recommendation from an influencer can garner hundreds of thousands of sales. In some cases, if the relationship is carefully cultivated, this is true. In others, the ROI fails to meet expectations as there wasn’t enough leg work done in selecting the influencer.
It’s estimated that advertisers will lose $1.3 billion due to fake follower numbers this year. For that reason, many well-known brands, like Unilever, are pulling away from larger influencer marketing and are targeting individuals with smaller followings. These individuals have clout within their social circles and know many of their followers outside of the digital space. By targeting these individuals with offers and discounts, brands can benefit from their trustworthiness.
Influencer marketing isn’t going away any time soon, but the brands who use this method are changing their approach. Instead of looking solely at the number of followers these individuals have, they check out user engagement through comments and mentions. They work closely with these influencers so they can understand the real ROI of such campaigns. Before closing a deal with an influencer, a brand should consider:
Follower count vs. comments:
Often, if an influencer is buying followers, their comment count won’t correlate to their overall follower count. If they have a million likes but only one or two comments, it’s a likely sign that their numbers are inflated. Even if the numbers are genuine, the lack of comments indicates a lack of engagement that will result in poor sales.
Brands should do a thorough review of the influencer’s content not just to see if they’ll represent the brand well, but if there will be conflicts. For example, if the influencer has been touting the benefits of Brand A since they started their channel on YouTube, viewers will likely be suspicious when they suddenly switch camps and start endorsing Brand B. It’s best to find influencers that are already actually using branded products, or ones without existing preferences.
There’s a certain lifecycle to consider in gaining the right influencers as their popularity window is shorter than that of a mainstream celebrity like a movie star or professional athlete. Ideally, brands want to connect with someone before their fame reaches their peak to get the best endorsement deal and benefit as the individual's clout in the market grows.
Influencer marketing continues to be crucial for brands that want to effectively promote products online. However, brands need to cultivate these relationships carefully and determine some acceptable key performance indicators to gain the greatest benefits from these partnerships.
#4: Differentiate Products With Digital Value-Adds
CPG brands are challenged by the ability to differentiate their product in a crowded marketplace. About 30,000 new consumer products are launched every year and the vast majority fail to gain a following. Standing out in this marketplace isn’t a matter of creating an entirely new product. Instead, it’s about finding methods to offer old products in new ways. This is a strategy that many challenger brands have leveraged with great success.
Consider Dollar Shave Club, a niche company that started out as a small indie brand before being acquired by Unilever after its service took off. The company didn’t reinvent the razor. Instead, they reinvented how razors were delivered. They turned shaving into a subscription service that provided consumers with something they value just as much as discounts or high quality; convenience. Consumers didn’t have to remember to buy razors anymore. Instead, they paid a monthly subscription fee and received razors in the mail as they needed them. This is a type of strategy that’s only possible in the digital space because brands need to be able to advertise the service as a value-add. It’s the service that helps the product stand out from other razors in the marketplace.
Another great example of this comes from General Mills and the company’s long-standing Box Tops for Education fundraiser. There are hundreds of different cereals on the market, but General Mills has managed to stand out with their educational fundraising. Through the fundraising efforts, General Mills establishes itself as a brand parents can trust. In the past, the company ran this through a physical program where box tops were actually mailed in. However, they’ve shifted to a digital program to improve giving and cut expenses. Soon, consumers will be able to scan their receipts from General Mills products and then donate to the school of their choice. This will occur through a mobile app which will also allow individuals to track the giving efforts. It’s a way of digitally breathing new life into an old program that set General Mills apart.
Marketing mix standards of product, pricing, promotion, and placement continue to influence consumer decision making, but digital marketing has made it easier to enhance these aspects. Mobile apps allow products to stand out, both from the competition and in the shopping aisle, while rewards and influencers help to establish trust and affinity for brands. By leveraging a strategy that incorporates all of these components, brands will be poised to increase their sales and improve their market share.