“Just as no building lacks an architecture, so no choice lacks a context”
Richard H Thaler, Nudge
If you ask ChatGPT to give you two truths and a lie about habitual shopper behavior the results could look like this:
- Shopping habits are often influenced by contextual cues, such as product displays and promotions.
- Habits are formed through repeated behavior and can become automatic over time.
- A person's shopping habits are completely fixed and cannot be changed.
If you’ve worked on observing, measuring consumers or reading about behavioral science you will immediately know which is the lie. Curious..? Read on!
All hail context – context is Queen!
When you are lying on a beach on a hot day you may be willing to pay significantly more for a cold beer from a fancy resort as compared to cold beer from a local vendor. This scenario is from Richard Thaler’s excellent 1984 paper (read here) where he explained, theoretically, how higher prices are accepted because of context. Our reference price for goods from a fancy resort is higher than what we are willing to pay a local roadside vendor. He called this transaction utility – the difference between the amount paid and the 'reference price' for the product. Hence our shopping habits are very much influenced by environmental cues that exist. If you have read Richard Thaler (and Cass Sunstein’s) book “Nudge” you already know that edits, modifications to the environment, which they call choice architecture, can be done to influence your shoppers’ habits.
Another fascinating field study that used 94 million transactions from a US grocery store chain found that spatial constraints drive variety seeking behaviour. When there is less space between the aisles, shoppers feel more constrained - undergoing a psychological reaction (or reactance) to this physical constraint. This reactance translates into more variety seeking behaviours. Hence, as a manufacturer you may want to test whether larger, less crowded stores would benefit from stocking your top moving products, and, in turn, whether crowded/space constrained stores could benefit by placing a larger variety of the products. It might also be worthwhile testing whether slow moving variants move better in smaller and crowded aisles/ groceries.
Beyond spatial constraints, other influences on shopping behaviour – identified include: human cognitive state, sensorial responses, affective state, social environment, physical environment, personality and demographic cohort. For example, older adults tend to go for safe and fewer choices when planning for consumption later, compared to younger adults who are driven by variety seeking behaviors for present and future consumption. Automaticity of habits - What we do . . . is what we do most of the time! Habits are the result of automatic cognitive processes, developed by extensive repetition, so well learned that they do not require conscious effort. There are critical components that make people start on a habit, as discussed below, but the trick is learning what makes the habit stick.
How do habits become habits?
Habits can stick around for a long time provided there is fertile ground for it – needing to be both familiar and in a repetitive context. This is important because repetitive context reduces the cognitive effort required to act. This context is the cue or trigger that sets off the next step which is the motivation to act or to create a craving.
Assume you have a habit of buying chips at the metro station. Every time you get off at the same metro stop 5 days a week and see the same kiosk with all flavours of your favourite brand (repetitive context), your mouth inadvertently waters when you think about how satiating the salty chip would be (craving). The next step is to act – you are ready with the exact currency needed for the 3 packets of chips. Over the next few hours at work, you suddenly find yourself microdosing on the rewards – salty stomach-filling pleasure whenever you need a wake up. That reward upticks dopamine (the pleasure hormone), and pleasure is experienced. It’s the trifecta of cue, craving and the pleasure generated by the reward that makes the habit stick.
Fixed vs flexible – can habits be disrupted?
While habits are oftentimes difficult to break, the psychology of shopper behavior tells us that they can be disrupted from time to time to form new ones. Of course, an external force like a pandemic pushed through major disruptions. But let’s not allow the pandemic shopping habits to distract us.
Consumers switch among products, categories, or brands for many reasons including, but not limited to, boredom. The utility/value they derive from buying the same product over and over could degrade over time. and they could seek a change in their brand, given the right context and trigger.
Breaking old habits and creating new ones
As a marketer you first need to deconstruct the habit loop of your category – paying specific attention to the biggest brand in your category to identify the cue, craving actions and reward.
It’s critical to crack the algorithm when they are in search mode in a shop because the variables that affect this algorithm are many.
Review that habit loop journey to see where it can be nudged in a different direction. Ideate and experiment to see what can be tinkered.
Observe and test the different modulators on shopping habits in an instore context – identify and act on those that can be controlled or modified in store
Understanding habit loops is a powerful tool for motivating human behaviour. In doing so, it’s important to consider the many variables or influencers that are evident in the shopper and consumption environment. Discovering these are key to breaking an existing habit and the first step in making your brand the new habit. Crafting well informed behavioral nudges/strategies and testing the hypothesis in the right contexts is possible with the right research partner.
If you would like to learn more about understanding shopper behavior in India and beyond, I can be reached at firstname.lastname@example.org