How People Buy

buy less [II],
originally uploaded by view-askew.

I’ve been reading Rafi Mohammed’s "Art of Pricing" book and am completely LOVING it. I have to admit that pricing is not my favorite topic — but PROFIT is a very favorite topic. Want profit, learn pricing strategy. It’s simple.

My soapbox is that Marketing Strategy is all about getting your ideal customer to choose you. Pricing Strategy is all about being profitable in that process. Which begs the obvious question :

How Do People Buy?

Rafi has a 5-step pricing model that disects how people buy, and I’d like to add my twist on a really good thing.

Of course we’re not interested in ALL people, just our target market – the people we love that love us back.

1. What’s important to these ideal customers when they are buying what you are selling.  The "Art of Pricing" talks a lot about features and that is extremely important.  Differentiating features are tangible and real.  But the benefits that your customer is looking for are also real.  In fact, they are emotional and that’s what’s going to sell and seal a higher profit.  If you can understand what’s important – then you can feature and highlight those benefits.
2. What’s the competition doing.  This comes straight from the book.  My twist is that you need to understand who what your ideal customers’ alternatives are – that’s the competition.  Sometimes that alternative is doing nothing, sometimes it’s buying from another source.  What is the competition targeting and what are they charging for that.  I think the key is to put those things in terms (language) that your target customer uses.

Rafi then goes into things that can change and alter your customer’s choices i.e. their income, market conditions, etc.  This is where I’d like to learn and understand some more before I comment. 

Like Rafi mentions in the book – the first two points are critical.  And I agree.

What’s your take on how people buy?