HomeWhy Modern Entrepreneurs Should Know Consumer Psychology

Why Modern Entrepreneurs Should Know Consumer Psychology

The more time I spend in digital marketing, the more I appreciate the efforts conventional marketers had to put in back in the day. Before the advent of the internet, the marketing landscape was very different. Shows like Mad Men do a good job of capturing what the marketing and branding world used to be like.

Of course, the primary purpose was still to engage a target audience, much like today. But back then businesses used Spectrum TV App, radio, newspapers, and billboards. Many brands such as Coca Cola, McDonald’s, and Ford used these channels to perfection. These brands still exist, in many cases, more than a century later.

They are a testament to successful conventional marketing, often used as case studies in universities and workshops. Professionally, you have to appreciate the outstanding branding and marketing milestones these brands have reached. A lot of this is the result of successfully understanding consumer psychology as it was back then. 

The Flip-Side of Conventional Marketing

Many people gloss over the flip-side of conventional marketing. For one thing, TV and radio had a very large market penetration. This placed broadcasters in a position to charge astronomically high prices for running adverts. Large brands dominated the airwaves and print media. In many ways, this acted as a barrier to entry for newer businesses and intrepid entrepreneurs.

There may well have been people who could have made better beverages, burgers, or cars if they had level footing with the brands we know today. But they couldn’t find a foothold to establish their brand credibility and recognition. In other words, they couldn’t survive because they didn’t have the deep pockets and huge advertising budgets that larger brands did.

Another thing about conventional marketing and advertising was measuring ROI with accuracy. There’s really no accurate way to measure exactly how many people saw a prime-time commercial on TV. Nor can you definitively tell how many people saw a billboard on their way to work.

Do you see the problem? Conventional marketers had to spend a lot of time in grassroots market research, identifying audiences, understanding their psyche, and tailoring strategies around them. In most cases, a successful brand was the result of many trials and errors in branding/marketing. For an entrepreneurial venture, this often proved too much.

Startups back then, just like now, often had tighter budgets during the initial phase. In other words, not only could entrepreneurs not compete with larger brands, but they also couldn’t reliably measure the success of their efforts. So unless they understood the psychology of the intended consumer, their brands were usually doomed to failure. 

Modern Digital Marketing Offers A Level Playing Field

All of this changed with the internet. We discovered new and better ways to do things. From catching up with friends to watching your favorite show on the Spectrum TV App, digital channels began to emerge. Modern marketing has a significant focus on reaching out to audiences through these digital channels.

To a large degree, this has leveled out the playing field for entrepreneurs and new businesses. A mom-and-pop burger joint can reach audiences today in the same way as McDonald’s or Burger King. Search engines, e-commerce, and social media help much smaller brands amass large followings at a fraction of the cost of conventional marketing. More importantly, digital mediums can help entrepreneurs measure their efforts reliably and accurately.

Both of these are the primary drivers behind the boom of startups and entrepreneurial culture over the past decade. Startups can market themselves to global audiences in the same way as bg-name brands. At the same time, entrepreneurs and business managers can assess and adjust their marketing efforts to maximize ROI.

However, one key ingredient remains the same as conventional marketing: understanding consumer psychology. In other words, you still need to know about how your target audience thinks to engage with them and turn them into paying customers. The next section deals with why this is so important.

Why Modern Business Leaders Should Understand Consumer Psychology

Consumer psychology is a vast and exhaustive field of study. Consumers react differently in response to different stimuli, which forms the basis of understanding consumer behavior. The field attempts to find connections between specific actions and the response they generate in consumers.

For an entrepreneur or a business leader, understanding the intended audience is key to delivering a successful product or service. Of course, the specifics will vary based on the product, service, audience, demographics, and many other factors. You’ll likely have to invest some time into understanding the finer points.

However, we won’t be biting off more than we can chew in this small blog. So instead, here are several ways how a working knowledge of consumer psychology can benefit entrepreneurs and business leaders:

Get The Attention You Want

Buyer personas are a big part of understanding consumer psychology. For an entrepreneur, a buyer persona is a mock-up of your ideal customer. Essentially, it is a singular representation of a larger audience that you want to target. Of course, with any audience, you will find it very hard to convert them into paying customers without engaging them. And to engage them, you first need their attention.

Virtually every industry and niche has a number of competing businesses battling for the same market share. That means your product or service needs to stand out from the rest. In other words, you need to grab attention through a meaningful demonstration of the distinct value your product or service offers.

Consumer psychology can help you refine your buyer persona by understanding the behaviors and buying habits of potential customers. This crucial information can help you differentiate your product in a way that appeals to your audience without appearing to hard-sell.

Engage and Resonate With Audiences

It’s not enough to grab your audience’s attention. You need to retain it as well, otherwise known as audience engagement. This can be a significant challenge, considering the average attention span is shrinking every year.

An understanding of consumer psychology can prove beneficial to an entrepreneur in such cases. Consumers usually aren’t looking for a product or service alone. They also give importance to the value the product or service adds (perceived or actual).

Consumers can have any number of motivations to buy from you, and many of them can be subjective. Understanding their psychology and behavior can help you use a mix of logic, emotional messaging, and psychological triggers. This is what will keep audiences engaged, as well as building value for your brand.  

Create Stronger Trust and Credibility

Even if you are selling the best product or service in your niche, the strength of your offering on its own is not enough to get customers to buy from you. Most buying decisions are based on one very important factor: trust. People buy from brands that have credibility and a solid reputation. In other words, a consumer will only buy from you if they can trust you.

So how does a new brand or an entrepreneurial venture develop trust? The simple answer is that you need to establish your authority within your audience. There are several ways to do this, ranging from blogs and whitepapers to a strong social media presence.

Consumers are more likely to trust a brand that they can see, reach out to, and communicate with. That means you should be aiming to answer every query, comment, and review. You may also have to work on building credibility on third-party sites like Yelp!. Developing trust can be a delicate process using both unconscious, subconscious, and conscious psychological signals. But if done right, it can prove to be a factor to drive long-term growth.   

Get More Customers

Businesses exist to earn profits. This is the singular goal every commercial enterprise will have. Profits help businesses reinvest in themselves, meet expenses, and thrive. Sales directly drive profits, meaning to earn profits you need a customer base. However, it isn’t enough to have a static base of customers.

Savvy entrepreneurs and business managers understand that acquiring new customers is key to sustained growth. Establishing trust with your target audience is a crucial step. But you still need to make efforts to convince your audience to make that buying decision. It’s great to have a large number of leads, but it is even better to convert them into purchasers.

This is where consumer psychology can prove to be a useful tool in your entrepreneurial arsenal. It can help you understand key aspects of your audience, such as their income levels, their motivators, their pain-points, and other factors that influence the final buying decision. This knowledge can help you refine things like your business website, conversion process, and sales funnel. In essence, you can make the jump from a potential customer to a paying one much easier for your audience.   



Please enter your comment!
Please enter your name here

Most Popular