1.2 Why People Buy Things
The 5 Fundamental Reasons

I travelled to Brisbane Australia several years ago, arriving at midnight on a bus from Sydney. I was alone, had no place to stay, and very little money. I needed a place to live out the next 6 to 8 hours. I was looking to meet my basic needs. With no real knowledge of the city, I started looking for a bridge to sleep under. As it turned out I met a cab driver walking down the road who took me to a nearby hostel where I got to sleep on the couch for the night. If he had tried to sell me a trip to the Grand Hyatt, I would have had to decline. I was not looking for comfort; I was looking for basic shelter. He had backpacked in his youth, and understood where I was coming from. He correctly assessed my situation, and offered me a solution that worked for me. The cab driver understood not only what I was looking for, but why I was looking for it. I needed shelter, but I only wanted to meet my basic needs, nothing more. If I ever met him again, I would thank him and buy two of whatever he was selling.

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For any business to be successful, the people inside the business must understand why people would want their products or services.

Why People Buy Things

We can break the reasons why people buy things down into 5 categories: basic needs, convenience (saves time or effort), peace of mind, image or ego, and fun. Understanding which category (or categories) a problem falls into is critical to providing an appropriate solution.

Why people buy things:
1. basic needs
2.convenience
3. peace of mind
4. image or ego
5. entertainment

1. Basic Needs
Basic needs are easy to understand. These are the things we need to survive. On a personal level this includes food, shelter and the like. On a business level these are basic elements required to do business like materials & labour. If you are addressing a basic need you can expect price to be a major factor. People don’t want to pay extra for their basic needs; they want to save that for more interesting things. When I slept on the couch in the hostel in Brisbane, I felt fortunate to have done business with that cab driver. The cab driver had met my needs exactly.

2. Convenience: Saving Time and Effort
We all like saving time and money. Anything convenience that saves us time and effort is a big plus. At a personal level, we often make purchasing decisions for convenience. Why do people buy dishwashers? Could we really not do the dishes by hand? Sure we could, but we don’t want to be bothered. If we’re looking for a place to live, we’d like a dishwasher or a housekeeper. It’s not a basic need. It’s a time and effort saving convenience. Paying for convenience is common. We want to spend our time and effort doing things we like.

In a business setting, time and effort savings are money in the bank. I don’t know about you, but I sure don’t want to be paying someone $20 an hour to cut lumber by hand if I could pay them $20 an hour to cut it with a chainsaw. If I need much lumber at all, a chainsaw purchase makes good business sense.

3. Peace of Mind
Peace of mind is something we all want. This is about buying security. The motivation is very similar for personal and business situations. We want to know we are safe, so we buy smoke detectors and fire extinguishers, maybe even a sprinkler system. We want to know our families, our employees, and our homes and businesses will be okay if something unexpected happens, so we buy insurance. Everyone has some level of fear of the unknown and the uncontrollable. Peace of mind is a powerful motivator.

4. Appeals to Image or Ego
Never underestimate the power of the ego. People are vain. We all love to look good in other people’s eyes. We like it when people are a little bit jealous when they look at our lives. We certainly don’t want to be looked down on or felt sorry for. We do and buy many things either because we like them (our own self-image), or because we think others will like them. Image and ego based decisions are emotion based decisions. Logic has no place here, it’s all about how something makes us feel. Tell your parents or friends that you’ve just bought a house in the right neighbourhood, and you are sure to get that hearty “Wow, good for you”.

So Image and Ego definitely motivate personal buying decisions, but do they also impact business decisions? Absolutely! At every level, business is personal. The owner of a business wants his business to appear to be the best. The manager of a department wants his department to be the envy of the other managers. The salesman wants to be recognized as the top seller. The Engineer wants to be seen as the most innovative designer. Ego and image are still driving decisions. Remember that a business is just a collection of people. Personal relationships and feelings are still what get things done. Business people still buy with their emotions. The only difference is that they then (sometimes) apply logic to justify the decision. If two solutions are similar you can be sure the one that satisfies the ego best will be the winner.

5. Fun
You need look no farther than the multi-billion dollar entertainment industry to know that this is true. We love our leisure time, and we’re willing to spend, spend, spend to have fun. That big screen TV, or the pool table in the basement have no practical purpose, they’re just fun. Businesses are no exception. Millions are spent by businesses every year on employee events, sports tickets, and workplace ambience. This is where we like to spend our money. It’s Fun.

The Desire to Save or Increase Money
Although increasing your personal wealth is not one of the primary reasons people buy, financial freedom is a burning desire inside many of us. In today’s western society, money is a powerful means of ensuring we are able to meet all of our primary objectives: basic needs, convenience, peace of mind, satisfying our ego, and having fun. So it’s no surprise that people will invest their money in things that either save them money, or make them money. We all want to be free. For individuals, financial freedom means securing your retirement, increasing your leisure options, leaving something for your kids, and the ability to help others. For businesses, financial success is the ability to keep the doors open and continue to help the customers, the employees and the owners. This is what it’s all about. Underneath it all, business success equals personal success for everyone involved. It is important to remember is that making money is not the end goal. It is a means to an end. It is also important to remember that without the money, it is impossible for a business to help anyone.

Summary

Understanding the reasons people buy, is just as important as understanding what they buy. Just knowing I’m looking for a place to live is not enough information to solve my problem. Do I want basic shelter for the night (basic need)? Do I want to be closer to work (convenience)? Do I want to feel safe letting my kids play outside (Peace of Mind)? Do I want a home I’m proud to entertain in (Image or Ego)? Do I want a pool table and a big screen TV (Fun)? Do I want to be able to sell it and finance a move to an acreage when I retire (increase money)? Understanding the reasons why I want a new place to live are critical to solving my problem. This applies to all purchasing decisions.

The better you understand people’s reasons for wanting something, the better equipped you are to help them with a great solution.

In the end providing the right solution improves the quality of people’s lives. The better you understand people’s reasons for wanting something, the better equipped you are to help them with a great solution. Remember every successful business helps themselves by helping others.