Rokt CEO Bruce Buchanan Shares Informed Insights on the Consumer Psyche and Consumer Behavior

Bruce Buchanan, CEO of Rokt, highlights ways in which consumer behavior insights should impact business decisions for better transaction outcomes.

In the e-commerce arena, each consumer purchase decision results from psychology-driven buyer behavior. Marketers who understand the consumer psyche, and who can identify targeted consumers’ needs and motivations, can develop a marketing strategy more likely to resonate with a specific market.

Successful Australian entrepreneur Bruce Buchanan is the co-founder and Chief Executive Officer (CEO) of e-commerce technology company Rokt. During his decades-long career, this top-tier executive developed keen insights into the consumer psyche that drives corresponding consumer behavior. In November 2019, Bruce Buchanan shared his views on the topic during the Scaling Up podcast.

4 Factors that Help Shape Consumer Buying Behavior

Corporations that market goods (or services) want to optimize the chances that consumers will purchase them. To achieve that goal, companies apply guidance from consumer buyer behavior analysts who study the rationale and methodology behind individuals’ purchase decisions.

These researchers have identified four factors (and multiple subfactors) that can influence consumer behavior. Every individual’s background, life experiences, and specific circumstances can cause each factor to vary in importance. Multiple factors are typically in play at the same time.

Personal Considerations

Each consumer represents a blend of demographic and lifestyle factors. To illustrate, the individual’s age, gender, personality, and lifestyle can help determine their priorities when making purchase decisions. In another example, consumers with more disposable income may strongly value higher-end products and services. Other consumers may focus on overall value and affordability.

Psychological Considerations

Subjective psychological factors pertain to a consumer’s perception, interpretation, and use of information about a potential purchase. First, a consumer’s product perception is driven by their cultural background, past experiences, and purchase expectations. Next, varied factors can motivate a consumer to seek a certain product type. To illustrate, a desire for personal security can spur a search for alarm system service providers.

Next, a consumer’s beliefs and attitudes serve as their cognitive assessment of a product or service. The consumer has the ability to acquire more information about the product or service, often through multiple channels.

Social Considerations

Four key social factors play a role in buying decisions. First, a consumer’s cultural beliefs help shape the entire purchase experience. Next, the consumer’s family (and their respective roles) can influence a specific family member’s purchase decision. The consumer’s social class, along with reference groups that provide guidance on social norms and behaviors, can affect a consumer’s purchase decision.

Situational Considerations

Multiple external situational factors can affect a consumer’s purchase decision. Time-related considerations, seasonal factors, and the purchase location can also enter into the mix. Finally, the buying occasion, such as a family member’s birthday or culturally important holiday, can help shape a consumer’s purchase behavior.

Bruce Buchanan’s Views on Consumer Behavior

Rokt CEO Bruce Buchanan has spent decades studying consumer motivations and delving into the consumer psyche at the particular Transaction Moment™. “I always thought of myself as someone [who’s] passionate about growing businesses and putting great teams of people around brands. There’s this intellectual thread that goes through it, which is very much tied to brand, [the] consumer, and consumer behavior. And I find it fascinating.

“[There are] so many concepts that you bring together around consumer behavior that are so not obvious when people are thinking through what actually makes a difference. And lots of people…lose context of the emotional aspects of how important the emotional connection is with a product,” Bruce Buchanan remarked.

Insights on the Consumer-Product Emotional Connection

A consumer’s emotions can strongly impact their purchase decisions. Emotion-focused marketing techniques can spur the consumer’s positive emotions, often driving them to make a purchase. Strong emotions can also trigger impulse purchases. Marketers often leverage this dynamic via flash sales and limited-time promotional offers. That said, consumers often attempt to offset their emotion-driven “wants” with rational factors such as product quality, functionality, and price.

When a consumer finds a brand that resonates with them, they often become emotionally attached to that brand identity. Perhaps the company’s and consumer’s values align. Maybe the consumer feels the product somehow enriches their life beyond its functional capabilities. Ideally, the marketer will choose a branding strategy that honors this strong emotional connection. If so, customers are more likely to make repeat purchases and display long-term customer loyalty.

The Paradox of Choice

Whether a customer is buying polo shirts or bath towels, they’ll likely have a myriad of choices. Merchants often assume that providing more choices will spur the customer to buy that brand rather than one offering very limited options.

When a customer is faced with a large number of choices, however, they often become overwhelmed and find it difficult to make a buying decision. Alternatively, the choices might be poorly organized or otherwise confusing. Naturally, the customer may be anxious about making a decision or feel dissatisfied after the purchase.

Often the customer doesn’t buy anything and instead leaves the store or the eCommerce platform. This phenomenon is known as “the paradox of choice.”

Interestingly, however, merchants who provide fewer highly relevant options often realize better outcomes. Because the customer finds it easier to make a purchase decision, the business enjoys higher sales and conversion rates. Customer satisfaction and long-term loyalty may also increase.

The Bruce Buchanan Rokt Perspective: “The Paradox of Choice”

Rokt CEO Bruce Buchanan noted that many businesses erroneously think they’ll dominate a category by offering more choices. “I find things like the paradox of choice in consumer behavior fascinating. Most businesses would naturally assume if they had a broader range of products or services, they would win in a category, but consumer behavior is such that the leading players typically often have to do the complete opposite.”

Trader Joe’s Success Story

Bruce Buchanan highlighted the Trader Joe’s brand, which enjoys great success by offering only a couple of choices in each category. “The most profitable grocery chain in the world is Trader Joe’s. It specializes in presenting one or two stock-keeping units in every particular category rather than actually presenting 50 SKUs.

“Early on, Trader Joe’s leaders realized that 50 SKUs actually result in less purchase behavior than one or two. And that’s because consumers get overwhelmed. And so, things like that with consumer behaviors I just find fascinating,” Bruce Buchanan observed.

Bruce Buchanan: Where Science Meets Art

Finally, Rokt CEO Bruce Buchanan noted that adopting an unconventional paradigm can help companies understand the consumer psyche in a new way. “Look, I’ve always been where science meets art. I think [it’s] a really interesting intersection point, and there’s only so much you can actually understand through the numbers. You’ve actually got to step back and start to think about things in a slightly different way.

“And so, the most powerful businesses typically have a combination of fantastic physical features and product ─ and then also a fantastic presentation of brand and emotional connection. And so ‘art meets science’ is really what you’re typically looking to achieve…I think where those things intersect, you get some really magical outcomes in terms of products and consumer behavior,” Bruce Buchanan concluded.