Consumer Behavior and Decision Making
Posted: February 10, 2011
Well-labeled produce and an encouraging word from the farmer can help you and your customers overcome percieved risks.
Top 10 Food Trends for 2011
- locally sourced meats and seafood
- locally grown produce
- sustainability as a culinary theme
- nutritious kids' dishes
- hyper-local items
- sustainable seafood
- gluten-free food
- allergy-conscious items
- back-to-basics cuisine
- farm-branded ingredients
According to the American Restaurant Association the above food characteristics will continue to drive consumer food-purchase decision making. Of course, we must understand our own customer base (or the customers we seek to have) and their social characteristics. This research does give some indications on how we could position ourselves to stay contemporary in the product mix and promotional efforts we use.
Building our customer relationships is built on understanding our customer's perceived risk of dealing with us. Perceived risk is that level of risk a consumer believes exists regarding the purchase of a specific product from a specific retailer, whether or not that belief is actually correct.
In order to make a sale, customer's perceived risk must be overcome. The more important the purchase is to the customer, the greater this perceived risk. As an illustration, if a customer is considering buying sweet corn for dinner tonight, the perceived risk is relatively low. If they are buying corn because the boss is coming over for dinner, the perceived risk goes up.
Perceived risks are also greater if the customer has not dealt with you as a retailer before. Unbranded items, like farmer-direct produce, also raise perceived risk. As the cost of an item goes up, so does the perceived risk. Being on a tight budget, having little experience in purchasing the item and having many alternatives to chose from all raise the perceived risk our customer may experience.
The 6 Types of Perceived Risk:
- Functional - Will the product perform as I expect? If the customer is buying sweet corn, this means, "Will this corn be as good as what I remember from last year or what I had last week?" If the customer is buying petunias, the risk is, "Will they make my garden look the way I want it to look?"
- Physical - Can the product hurt me, my children or my pets? Pest control methods used in the production of food crops is one common concern here, but ornamentals that bear poisonous fruit can also be a concern.
- Social - What will my peers think? If customers are buying sweet corn to eat in the privacy of their home, the risk here is low. If they buy petunias and plant them in the front yard and petunias are socially out this year, it's like having a big sign in your yard for five months saying, "geek lives here".
- Psychological - Am I doing the right thing? This can be a strong motivator in plant sales for the environmentally concerned or an impossible obstacle for the truly paranoid. If our customer base includes what I call the food-elite this category of perceived risk may be the single most significant decision risk faced by our buyers.
- Financial - Can I afford the purchase? This is not a major problem for most people buying sweet corn or petunias. It is a major obstacle for customers considering buying ½ an animal for the home freezer or a flowering trees that may cost $80 to $200. If our customer base is resource stressed he financial risk of basic food purchases can be a challenge for us to address.
- Time - How much time and effort may I expend to make this purchase? This may be a greater perceived risk than we think. Picture your potential customer in their car thinking, "Do I want to pull into that crowded parking lot? Do I want to stand in that line for a dozen ears of corn?" This is scary! Many of the farm stands I visit fail to overcome this perceived risk. Their potential customers drive by.
What can you do to overcome perceived risk? You encounter examples every day. Why is a new car guaranteed for three years or 36,000 miles? This guarantee helps overcome the customer's functional perceived risk. Why does the fast food sign say billions and billions sold? It reassures the customers that the food will taste like they expect it to, it won't hurt them and it's socially acceptable. The customer feels they must be doing the right thing, because everyone else is doing it, too. Why do super-markets have express check outs? These special facilities make the customer think that the time risk is low.
In our roadside stands and garden centers, we can guarantee produce quality or the survival of costly perennials. We can reassure the customer our produce is fresh and pesticide free or picked today. We can give personal endorsements, like a sign that says "Sweet Corn-Best of the Season" or "Yellow Tomatoes-Bill's Favorite". We can display information about the nutritional value of fruits and vegetables or the environmental value of planting a tree or flowers.
Most of all, we can watch for the hesitant customers and give them an encouraging word. After all, typically they're only concerned about perceived risks.