Why Understanding Consumer Psychology is Important for Companies to Succeed
By: Psychology Talks
Everyday consumers are bombarded with hundreds of advertising messages, from every possible source, i.e., mobiles, hoarding (billboards), internet, TV, etc. They have more choices than ever. Consumers have access to an unlimited amount of information about each and every brand in the marketplace. Unlike the traditional ways of buying products and services, it is evident that lots have evolved with so much technology at our fingertips. Competition has become tougher than ever — several brands offering the same solution. In order to lure consumers and stand out ‘unique’ in the market, companies are needed to understand their consumers well. The knowledge of psychology helps companies to build a strong and ever-lasting relationship with their consumers.
It is a common mistake to assume that `utility’ is the most important dimension, but research shows that `experience’ is the dominant dimension, that people value the most or attach to any brand. This is mainly because the utility of a product has become standardized. For example, all cars will transport you from A to B, but cars vary enormously in terms of the driving experience and emotional value they associate with their car. For example, Compare a Porsche and a Kia. Porsche is perceived to be an upbeat and high-end brand, whereas Kia is seen to be a middle-class option.
In order to be ahead of the rest, companies conduct researches to gain a complete understanding of their consumers’ ordinary everyday lives and activities. This gives them insights into what constraints and considerations are operating when people choose their products or competitor’s, what barriers they face and how they can position or market their product differently to address these.
However, it is interesting to note that no matter how much a company invests on understanding their consumers, the consumers may always surprise them in the least conventional manners. In general, psychology research has shown that it is often the consumers themselves, discover the different uses of a new product, which may be completely different from the intended one from the manufacturer. For example, early telephone users pioneered the use of the telephone for social communication in the face of direct opposition from the telephone operators, who tried to limit its use to business purposes only. Similarly, early microwave oven owners `discovered’ the use of this device as a quick reheater of food, which was completely opposite to the vision of the manufacturers who were positioning it as a general cooking device competing with the conventional oven. Another interesting example is, teenagers, pioneered the use of text messaging on mobile `phones, inventing a whole new language in the process. This confounded manufacturers who predicted that texting would be a minor feature because it was so awkward to accomplish compared to talking.
All in all, the knowledge of consumer psychology provides an edge to the companies to understand their consumers in a better way. So, they can offer their product or services wisely, which can genuinely make the difference in their consumers’ lives and grow the market share more effectively.