The Kristen Boss Podcast: Episode 223 - Consumer Behavior with Starbucks & Disney

Release Date: August 5, 2024

In Episode 223 of The Kristen Boss Podcast, host Kristen Boss delves deep into the intricacies of consumer behavior in 2024, using iconic brands like Starbucks and Disney as primary examples. Through engaging discussions, insightful observations, and actionable business strategies, Kristen uncovers the psychological motivations behind today's purchasing decisions and how entrepreneurs can leverage this understanding to enhance their businesses.

1. Bridging Knowledge and Action

Kristen opens the episode by addressing a common challenge faced by entrepreneurs: the gap between knowing what to do and actually implementing strategies. She emphasizes the importance of foundational habits and offers resources like The Hub and the Social Selling Academy to help listeners bridge this gap.

"There's something between knowing what to do and actually doing and following through... You don't have to do that." [00:05]

2. Observing Consumer Spending Patterns

Kristen shares her passion for observing how people spend their money, both in her travels and through personal anecdotes involving her husband’s involvement in hobby groups on Facebook. She challenges the prevalent narrative that consumers are cutting back indiscriminately on spending.

"I think it's not because people don't want your product. I have a completely different philosophy behind this because I've been observing consumer behaviors." [02:26]

3. The Reticular Activating System and Confirmation Bias

Delving into the science of perception, Kristen explains the role of the reticular activating system in shaping our awareness of consumer trends. She highlights how focusing on specific aspects can create a confirmation bias, making it seem as though certain behaviors are more prevalent than they actually are.

"Your brain is going to look for evidence of what we give it... it's going to filter out and feel like it's seen red cars everywhere." [05:15]

4. The Lipstick Effect: Spending for Emotional Fulfillment

Kristen introduces the concept of the lipstick effect, where consumers maintain spending on items that provide emotional satisfaction even during economic downturns. She argues that people prioritize purchases that enhance their well-being over mere necessity.

"I actually think... this is known as the lipstick effect, whereas even during economic downturns, people spend on things that make them feel good." [04:50]

Using Starbucks as a case study, she observes that despite perceptions of high prices, consumers continue to flock to Starbucks for their daily indulgences, attributing this to the immediate dopamine release these purchases offer.

"If it were the price of things, then the Starbucks line would have slowed down. It's not... it's still $9 for an oat milkshake and espresso." [06:15]

5. Disneyland: Investing in Experiences

Shifting focus to Disneyland, Kristen discusses how consumers are willing to spend significant amounts on experiences that hold sentimental and emotional value. She contrasts consumer debt with asset debt, advocating for investments that offer returns, such as business growth, over liabilities like leisure spending.

"They're like, I will spend this money because I like the memories. I like the experience. It makes me feel a certain kind of way." [12:30]

Kristen also touches on the importance of understanding and leveraging tax benefits related to business expenditures, encouraging entrepreneurs to view investments in their business as strategic moves that offer long-term value.

"When you pay for education, when you pay for coaches... that is considered a business write-off, which means you save on the back end with how much you pay in taxes." [15:40]

6. Psychological Drivers: Avoiding Pain vs. Seeking Desire

A significant portion of the episode is dedicated to exploring the psychological drivers behind consumer behavior. Kristen explains that consumers are more motivated to avoid pain (e.g., financial restrictions) than to seek out new desires. This insight is crucial for entrepreneurs aiming to position their products as solutions that alleviate pain or enhance happiness.

"Consumers are more likely to run away from pain... So if you could make money instead of cutting your budget, it feels a little more cushy." [16:50]

7. Practical Business Strategies

Kristen provides actionable advice for entrepreneurs to align their products and marketing strategies with the emotional motivations of consumers:

• Create Content that Generates Curiosity and Interest: Develop content that speaks directly to the consumer's desires and pain points, fostering a connection that drives engagement and sales.

• Communicate Value Through Emotional Benefits: Highlight how your product or service can provide instant gratification or alleviate pain, catering to the psychological triggers that influence purchasing decisions.

• Invest in Business Growth as Asset Debt: Encourage reinvesting in business assets that offer returns, such as education and coaching, rather than accumulating liabilities.

"You have to communicate how your product or service is going to make them feel a certain kind of way. You have to figure out... does it save them pain or give them a lot of dopamine." [17:25]

8. Encouraging Self-Reflection and Consumer Awareness

Kristen urges listeners to conduct a personal purchasing inventory, reflecting on recent purchases to understand their motivations. This self-awareness is pivotal for entrepreneurs to empathize with their target audience and tailor their offerings accordingly.

"Do your purchasing inventory of the last 30 days and ask yourself, what were purchases I made that made me feel good and why do I keep making those purchases." [18:10]

9. Conclusion: Building Belief and Connecting with Consumers

In wrapping up, Kristen emphasizes the importance of building belief through consistent observation and understanding of consumer spending habits. By aligning business strategies with the emotional drivers of consumers, entrepreneurs can effectively serve their audience and foster loyal customer relationships.

"Once you understand your own consumer psychology when you create content, you will better be able to speak to the consumer psychology of people who follow you." [17:50]

Key Takeaways:

• Emotional Spending Prevails: Consumers prioritize purchases that provide emotional satisfaction over purely utilitarian needs, a behavior encapsulated by the lipstick effect.

• Psychological Insights Are Crucial: Understanding the reticular activating system and confirmation bias helps in comprehending how consumers perceive and engage with products.

• Investing in Assets Over Liabilities: Entrepreneurs should focus on business investments that offer returns and value, contrasting with consumer debts that do not.

• Strategic Communication: Effectively communicate how your product alleviates pain or enhances happiness to resonate with consumer motivations.

• Self-Reflection for Empathy: Conduct personal purchasing inventories to better understand and empathize with your target audience's behaviors and preferences.

Final Thoughts:

Kristen Boss's exploration of consumer behavior provides valuable insights for entrepreneurs aiming to navigate the modern marketplace. By recognizing the psychological underpinnings of spending and aligning business strategies accordingly, entrepreneurs can foster deeper connections with their audience and drive sustainable business growth.

Notable Quotes:

• "There is this thing called in your brain called your reticular activating system... creating a confirmation bias." [05:15]

• "People are still spending on things that make them feel good, because they like it, because it's a value to me." [06:45]

• "Consumers are more likely to run away from pain than they are towards desire." [16:50]

• "Once you understand your own consumer psychology when you create content, you will better be able to speak to the consumer psychology of people who follow you." [17:50]

Resources Mentioned:

• The Hub: www.kristenboss.com
• Social Selling Academy: Details available in the episode’s show notes.

If you enjoyed this summary, consider listening to the full episode for a more comprehensive understanding of consumer behavior strategies tailored for today's entrepreneurs.