MISTAKE #60: You think purchase decisions are made in discrete category silos

Do you ever look beyond your category when trying to understand how to change more shoppers into buyers?

Or do you think your category exists in isolation in the shopper’s mind?  No external factors influence the purchase decision.  Buying your product is influenced in no way by the decision to buy other products in other categories.

You’ve got a void in your perspective if you think this way.  And don’t assume that the less expensive your product is, the less likely this dynamic impacts you.

Here are a few personal examples that prove this out in my life:

The decision to buy my first iPhone was partially justified by the fact that I would not buy a separate GPS, update my aging point-and-shoot digital camera or pay for navigation in my next car (dynamics these industries are well aware of now, but probably didn't view as much of a threat in 2009).

My family funds our travel adventures (at unravelingwithkids.com) by consciously managing other discretionary budgets.  This includes not taking trips to the mall to avoid the temptation of buying clothes we don't need and not being sucked in by Living Social or Groupon deals we know we call lead to spending $50 on an unplanned night out just to save $10.

I was finally prompted to get a $4,000 Lasik eye surgery (by a Living Social Deal...seriously) and having it caused me to purchase my first pair of high-end sunglasses.

In my situation, the ability to fund the big-ticket iPhone purchase and travel splurges came at the expense of another category spending.  However, the decision to get Lasik actually triggered more spending on a related category.

For me, the decision to make big-ticket purchases is facilitated by many decisions not to make small-ticket purchases.  But the same dynamics exist for lower-priced, more frequently-purchased items.

Early in my career, I saw these tradeoffs magnified when studying lower-income consumers.  I learned that most lower incomes still buy name brands and some premium products.  But they have to be even more acutely aware of the cross-category tradeoffs they make and they require greater justification to spend extra money in certain categories. 

Wall Street clearly believes this cross-category dynamic exists as well, evidenced by how quickly they compare a 10-cent drop in the cost of a gallon of gasoline to a tax cut that will drive other economic activity.  And they can be even faster to blame dips in spending on an increase in gasoline. 

I guess the price of gasoline must have a greater emotional impact on spending habits because a typical household consuming 100 gallons of gas per month only loses $10,00 in spending power when gas when it goes up a dime.

BROADEN YOUR VIEW TO DEEPEN YOUR UNDERSTANDING

Few companies get beyond the boundaries of their category when studying shopping habits.  They don’t take time to understand the more complete role the purchase or use of their product plays in the shopper’s life.

Perhaps you’re missing the real opportunity for your product to take off because that opportunity lies beyond the boundaries of the category.

Maybe there is an opportunity to better tie the purchase of your product to broader life goals through reframing your marketing message:  Buying your product helps them get closer to accomplishing other goals.

Maybe the opportunity is to remove barriers by better framing the broader trade-offs of your product:  Buying your product does not delay or interfere with accomplishing other goals.

Perhaps closing the sale on your product needs to include convincing shoppers to spend less money on other categories…or demonstrating how spending more money on your products saves them from spending extra money elsewhere.

Laundry detergent manufacturers have done a great job of getting beyond the boundaries of their category and the perception that the purchase decision exists in a discrete silo.  Here are just a few examples of how they have connected the purchase of detergent with other purchases.

Spending an extra 10 cents on a load of laundry is cheap insurance for protecting the $500 worth of clothes in the washer.

Using detergents designed for cold water can add up to lower utility bills every month.

Better laundry detergents can reduce the need for pre-treaters or additives.

Having clean clothes can be a priceless confidence booster for the whole family.

Do you like how buying better laundry detergent saves money on clothes, electric bills, other cleaning products, and counseling sessions?  It is a lot better than the ubiquitous charity-focused cliches comparing support of their cause to the cost of a cup of coffee (nothing against the charity, just the outdated value reframing).

Hopefully, this has inspired you to consider exploring your category in a broader context.  Maybe you need to take a fresh look at your competition to see if they’ve figured out a connection that is working.  Or maybe you could be the first to communicate with shoppers in a more relevant, holistic manner.

Of course, don’t jump into cross-category dynamics if you haven’t already gone deep into understanding your own category.

Need help getting outside your category silo?  Let us bring experience from 150 categories to discover new paths to close the sale.