Consumer Choice – Why Customers Choose or Don’t your Products/Business.

Customers don’t choose your products or services out of the blue. In the business world, there is a ‘principle’ that influences why and how customers choose to consume and which products they choose to consume.

That does not just happen with your customers only. Even as a business owner, you are a customer to other businesses that provide you with the products and services you need. There is a hypothesis behind why you buy what you buy, and where you buy from.

Consumer Choice.

In simple terms, consumer choice is the decisions customers make with regard to products and services. Whether to buy product X, product Y, or product Z.

In economics, consumer choice is the simplest explanation for how consumers/customers decide which products to pay for or to consume over time.

Why consumers make choices.

The simplest way to explain why consumers make choices is in relation to the budget. Each consumer/customer is trying to acquire the most for their limited budget.

Economists explain it as consumers trying to maximize satisfaction out of their constrained budget. And, this is in line with their individual/personal tastes and preferences.

Main factors behind a consumer’s choice.

In economics, there are so many explanations behind why people consume what they choose to consume.

For example, in the wave of Covid-19, many people have changed how and what products and services they consume. This is as a result of external factors such as the economic downslide, unemployment, decreased income, etc.

Apart from external factors, there are other personal factors. This inclines to customers buying what gives them the greatest satisfaction out of class, style, affordability, etc.   

Budget constraints

Most people have set budgets. Whether they are well-written budgets with each expenditure planned for or casually drafted budgets with spending limits.

Each customer with a planned budget wants to get the most satisfaction from it. Or as economists say it: the highest level of utility. Different people define and judge their own utility differently.

With a constrained budget, a customer will think about buying a little more of one item and giving up a little of something else.  They will think of what makes them the happiest and how much things cost and how they fit within their budget.

Personal tastes and preferences

Human beings have different tastes and preferences. These tastes and preferences influence how and what customers pay for.

When it comes to products and services customer X will choose product A while customer Y will choose product B. That’s why we have many brands and many stores in the market.

For example, customer X will choose to buy her groceries from mama mbogas in Marikiti while customer Y will go to a grocery store e.g. Zucchini or a supermarket.

Different factors such as income, where they live, among others, influence people’s tastes and preferences.

Economic Reasons

  • How much income someone makes influences their budget constraints and their personal tastes and preferences. A change in someone’s income will cause a shift in budget constraints.

For example, if a person gets a salary slash of 5%, he or she is likely going to limit their budget to fit their income. That is, they might prefer buying products that are cheaper compared to those they are used to or cut out some products or services from their budget.

On the other hand, if customer X gets an income rise, their budget limit changes. They may consider using products they never used before or new services. Or they might increase the number of products they use.

  • The prices of goods and services influence the choices people make. And when there is a change in the price of goods and services, there will be a shift in budget constraints and customer preferences of goods and services.

For example, for some customers, if a brand of bread they have used for a while increases its prices, they are likely to choose another brand with lower prices.

How to influence consumer choice as a business

Often times, consumers find it difficult to make consumer choices. This is because of the many brand choices in the market and evaluating the different alternatives can sometimes be a challenge.

However, a customer has to make a choice at the end of the day right? And to simplify their decision-making process, they automatically use some shortcuts and put into consideration different attributes. These include prices, brand, product presentation, etc.

For you as a business owner, the customer’s purchase decision-making process is very crucial. That’s when a customer decides to buy your product or pay for your services or on the other hand, go back to a different business that’s your competitor.

That means you need to find ways to influence your consumers’ choice.

1). Value

Value is a great way to influence your customers’ choices. Every customer wants to get value in whatever product or service they put their money into – whether it’s a big or a small product. And they pay for a product or a service they believe will give them the best value.

Make sure your products or services give value to those who pay for them. When they get the value they believed they would, they will come back.

2). Ritual consumption

Depending on the industry your business is in, you could tie your products to ritual consumption.

Economists believe that customers tend to pay for products or services tying them to life events. The patterns of behavior or habits tied to life events influence what and how customers consume.

Thus a customer develops the habit of buying coffee from your café every morning on their way to work. Or a pattern of shopping for their gift cards, presents, during birthdays, holidays, anniversaries, and on other special days from your gift shop or curio shop.

3). Situational factors to influence purchase:

  • Have what your customers need in stock
  • Offer multiple payment options (Cash, M-Pesa, credit cards, debit cards, etc.)
  • Conveniently place your check-out stands in your store. If you have a big store, have several check-out points.
  • Find ways to entertain your customers as they wait in line. E.g. put up digital displays, play some music, etc.
  • Offer delivery, or a return policy, or a warranty for your products or services.

After purchase

What happens after a customer purchases your product or pays for your services is also crucial.

As an entrepreneur, creating customer satisfaction is vital. Focus on creating satisfied customers who become loyal customers, purchase your products again or pay for your services again and refer others to you.

Make customers choose you again and again.

Build up realistic expectations for your customers when they interact with your brand online and offline and deliver them. Don’t set too high expectations or too low expectations.

Share correct and important information about your products or services with your customers to avoid improper usage. Improper usage is a great recipe for customer dissatisfaction as a customer is expecting the right results or value yet they are using the product or service wrongly.

Seeking customer feedback is a great way to cut down the negative word of mouth. Get in touch with your customers and get their thoughts about your products or services. Thank them for doing business with you to show you care and they are important.

To build repeat customers and customer loyalty, work towards building a relationship with customers on first purchase and first encounter. As customers successively buy products, they become loyal to specific brands. They buy from specific brands, from specific shops and stores.

Final Thoughts…

Different factors will influence a customer to choose your product or service over others. These factors lay in the hands of a customer while others don’t.

You will not control the economy, or how much income they make or influence their tastes or preferences. However, once they choose your product once, to some extent, the ball lies in your coat to make them choose you again.