Behavior Markets

In society, behaviors change… so markets shift.

After many years of studying behaviors and the sciences that construct its research, one thing is paramount: human behavior is the cornerstone of business success.

Behavior is so important that not only it determines the winners of a sector, but also casts the losers to the wayside. Behavior can shift entire markets, or deem them irrelevant. Before I get too far on this thought, let’s first define “behavior”.

Behavior is typically reduced to how something or someone acts. In addition to this, we can say that these actions are in response to something or a stimulus. As an example, the discomfort from a rock inside your shoe will annoy you and cause your behavior to change. Another stimulus could be through a drive — like wanting to run a marathon will motivate you to start running, conditioning, eating healthy, etc. As you can see, these behavioral changes can be short-term improvisions or long-term identity shifts. Since we are focusing on markets, we will be mainly addressing the long-term behavioral changes.

The science of behavior takes psychology and overall influences into consideration. This “behavioral science” is specifically applied to consumer behavior in stores or even used by governments to help “nudge” citizens to make certain decisions. Since behavior determines decisions and impact sales, we must look at the crux of behavior. To me, this center is desire.

Desire Drives Behavior

Whether pain or aspiration, desire is the core of these driving forces. We either desire to move from a current state or we desire to attain a future state. This is true for the clothes we buy, the cars we drive, or even the products we enjoy. I’ve also come to this conclusion when we work with a client in rebranding their business, they want us to transform them to fulfill one of these desires. We can help them grow into the brand they wish to be or escape the current situation that have their business stuck. Either way, the desire is there that drives the behavior.

Accepting that desire is the force behind behaviors, then we can also say that these desires also change behaviors. We have seen this recently in the food sector as consumers desire healthier options and their buying behavior changes, which then shifts the entire market’s demand or even has created new markets that new brands have sprung up to fulfill. Uber, Doordash, Amazon, Liquid Death, Farmer’s Dog, AirBnB, Target, etc are all examples of these brands who addressed a rising desire that they then were able to provide a market fit to supply the demand fairly.

Desire vs Demand

Desire drastically shifts markets because — unlike demand — it is emotional and wishful. Desire is our deep wish for something. Whether we can actually achieve it or not isn’t the point. When the desire rises to a “boiling point” it will then become a matter of justifying the action and its associated costs. Can you afford it? Can you afford not to do it? When determined then the demand is created which spurs brands to supply.

Demand is more logical and rational. It is considering the cost and return. Yes, the desire may be there whether there is demand or not. The funny thing about demand is that the supply can either come to the demand and address it or the supply can arrive and the desire is reallocated to the provided supply whether it fulfills completely or not.

Henry Ford had this issue when he brought the automobile to the horse owners. The desire for faster travel was apparent, however the demand was for faster horses because the product market fit of an automobile was not apparent. When Ford brought the supply of automobiles, although they addressed the desire for faster travel, he needed to reframe his product as “horseless carriages” to align with the “logical” demand that was misdirecting the desire. The automobile market was then birthed and the rest is history.

Although a desire may be misdirected through existing product options, the demand can be better supplied through a new supply. A more recent example is the desire for a nice place to stay while traveling was being absorbed by existing offerings like hotels so the demand was mistranslated until AirBnB came around with a different type of supply. The market then reassessed and allocated desire for the AirBnB product offering.

Ultimately, just as desire changes behavior and shifts entire markets, businesses can address these changes by framing their brands and offerings to fit the desire.

Desirable Brands

When a business is able to capture the desire with a brilliant product market fit that addresses the desire of the market, magic happens. We saw this with Uber, Apple, Rifle Paper Co, AirBnB, Spanx, Redbull, etc. as they positioned their products to address the desire with their supply.

This can also be applied to brands. When a brand is able to frame its positioning to be more relevant to the desire, then it is able to attract the demand and represent the desire synonymously. It’s essentially a similar path of finding a market fit for a product, but applying it to a brand as a whole. These “desirable brands” would be ones such as Tesla who captured the desire for a nice looking electric vehicle or Casper who captured the desire for a better mattress shopping experience. My theory of “desirable brands” definitely entails the brand being more specific in the desire it is addressing. Then it pulls off the positioning by also being a logical solution — Tesla’s price point and ease of purchase, Casper shopping and delivery ease — this is why a lot of new startups are DTC (direct to consumer) models with laser focused positions.

This becomes extremely important for businesses adapting to market shifts due to behavioral changes, but also brands finding the next advantage in a market that is either existing or new.

Market Shifts

Just as behaviors change and impact markets, brands do have the ability to adapt accordingly. Whether it’s bringing a new offering to the market, reframing an existing product, or even repositioning a brand completely, there is opportunity for businesses who are willing to focus and strategically plan ahead.

Market shifts are a guarantee because human behaviors change. The desires behind these behaviors are always moving and companies that keep a pulse on the desires of their audience are the ones who will be proactive and address it. They are the ones who will not only absorb the demand and supply it, but also be the ones who have the ability to become a desirable brand.