Learn What Influences Customer Purchases

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Have you made any big purchases recently? Perhaps you bought a new laptop or tablet, or upgraded your phone? If so, how did you decide which model to choose?

People are increasingly turning to online reviews and social media before they make an important purchase. So, how should you take account of this in your marketing planning?

This article looks at Simonson and Rosen's Influence Mix. This helps you think about the impact of social media on your customers' purchasing decisions, so that you can develop a well-focused marketing strategy.

About the Tool

Itamar Simonson and Emanuel Rosen are experts in how social media is changing the way that people shop, by making other people's opinions more accessible.

In their 2014 book, "Absolute Value," they explain how the Internet is moving us towards an age of nearly perfect information. This allows people to predict, with great accuracy, what it would be like to own and use a product before they buy it.

Where people's purchasing decisions are strongly influenced by online reviews and peer-to-peer information sharing, you clearly need to take account of this in your marketing. However, customers don't assess all purchases in the same way.

Simonson and Rosen identified three main factors that influence customers' purchasing decisions, and published them in the January/February 2014 issue of the Harvard Business Review. These are:

Prior preferences, beliefs, and experiences (P).
Information from marketers, such as packaging, pricing, and advertising (M).
Input from other people, such as friends, family, and peers (O).
Reprinted by permission of Harvard Business Review. From "What Marketers Misunderstand About Online Reviews" by Itamar Simonson and Emanuel Rosen, January 2014. Copyright ? 2014 by the Harvard Business School Publishing Corporation; all rights reserved.

The more a person is influenced by one of these factors, the less influence the other factors will have. To make the most of people's preferences, you need to identify which factor is the most influential, and then tailor your marketing strategy to fit this.

Let's look at these factors in more detail:

Prior Preferences, Beliefs, and Experiences (P)

Routine, functional, and low-risk purchases are often influenced by prior preferences, beliefs, and experiences. For example, customers will often decide what type of milk, beverage, or detergent to buy, based upon past experience and personal preferences. They don't give the decision a great deal of thought, and they buy largely from habit.

Information From Marketers (M)

Traditional forms of marketing ? packaging, pricing, and advertising ? have the strongest influence on emotionally driven purchases, and they are often used to try to persuade customers to switch from familiar brands to something new. Examples in this area include prestige and luxury goods such as cars, handbags, and watches, which rely largely on the status associated with the brand.

Input From Other People (O)

Consumer groups, review websites, and social media have had a huge effect on the way that people choose products like holidays and cutting-edge technologies. Here, they seek information and reassurance in the form of real-life reviews from experts and from people like themselves.

This is especially relevant for products like laptops and some tablets and smartphones. These cost a lot, but there is also a level of uncertainty over quality, usability, functionality, and reliability. Here, people strongly value the reassurance that comes from hearing about other people's experience with the product.

Using the Influence Mix

Simonson and Rosen's Influence Mix describes the relative importance of P, M, and O for your customers. This determines whether you need to adopt a traditional marketing strategy, or whether you would benefit from more of a social media-centred approach.

Step 1: Identify Your Product's Primary Influence

Different products and services naturally attract a different Influence Mix. To determine which factor is most significant, consider the following:

Do people use your product out of habit or because of past experience? Do you have a strong reputation for quality or value for money? If so, your customers are likely to rely most strongly on prior preferences, beliefs, and experiences (P).
Maybe people buy your product because they recognize and like the brand. In this case, they are most likely to be influenced by information from marketers (M).
Or perhaps you provide a product or service in an area where quality can vary widely from one supplier to another ? examples include hotels, independent restaurants, lawyers or tradesmen such as plumbers, electricians, or auto mechanics. In these instances, customer reviews and "word of mouth" can make or break a business's reputation, so your customers are likely to rely on information from other people (O).

https://www.mindtools.com/pages/article/understanding-influence.htm