CNGA Looseleaf Oct/Nov 2018

9 LooseLeaf October/November 2018 continues » O&M PRESENTER DR. MARCO PALMA PROVIDES INSIGHTS & ECONOMIC OUTLOOK Customers are not necessarily rational decision makers. Though all of us would like to think we use logic, reason and well-disciplined intellectual processes when making purchasing decisions, most of us realize that other motivations and forces influence our shopping behaviors. Conscious or unconscious emotions play a larger part in our choices than we even suspect. Dr. Marco Palma, the featured presenter at CNGA’s Owners & Managers (O&M) Leadership Retreat in November, will share some of his discoveries about customer behavioral patterns from his research at the Human Behavior Lab of the Texas A&M University System. Palma is Professor and Director of the Human Behavior Lab, collaborating with more than 100 researchers, professors and graduate students. At the O&M Leadership Retreat in Colorado Springs on Nov. 2, “I will begin by talking about the economic conditions and structure relevant to the green industry. I’ll switch to talking about recent economics and consumer behaviors, and try to provide a snapshot of some of the neurological drivers of customer decision making. Then, I’ll tie it all back together in the sense that customers are very important, but in many cases, as customers we don’t even understand the drivers of our decisions,” Palma explained. Looking at the structure of the green industry, the number of firms keeps growing. A small percentage have been in business since the 1800s. That number was stable from the 1900s up to about the 1970s. At that time, we experienced a very large growth in the industry, when entrepreneurs realized opportunities existed to make money. For nearly three decades through the ‘90s, we observed a large number of firms opening. Then through the great recession, a few firms started exiting the industry when sales dropped off. Consumers did not see many green industry products as necessities, and they were spending less on those perceived discretionary items and more on food, electric, gas and water bills. As we saw that transition, the hyper competitive environment created by the structure of the green industry also impacted sales. Almost two-thirds of green industry firms have sales of less than $250,000. Yet, this large number of companies accounts for only 3 percent of the actual sales in the industry. On other end of spectrum, 0.4 percent of firms have sales of $50 million or more, and account for nearly one-fifth (18 percent) of industry sales. The firms with the highest sales can use marketing strategies based on economies of scale to compete on price and brand recognition due to their larger marketing reach. The firms with the lower sales have to strategize Decoding Customer Behavior colorad o nga.org Lab Director Dr. Marco Palma