By Geoffrey Henny

Observing how people actually behave when they buy things – especially in specialty stores (physical or online) such as military surplus – is a growing area of study in Microeconomics. It is called Behavioral Economics, also called Experimental Economics. This growing discipline is important to all businesses that want to understand what makes up their customers’ buying habits.

Traditional ideas about what motivates consumers, such as price, income, quality, fashion, sex appeal, utility, status, lifestyle, demographics and options, are useful guides but they cause sellers to miss a lot of opportunities to make a sale. This is because these conventional indicators – widely used in economic theory and traditional marketing – assume that buyers make conscious rational choices.

Behavioral Economics acknowledges that this is part of the story, but it also demonstrates that other more irrational factors may be more important. This is examined by running real-time experiments, observing people by camera and with in-store interviews. These factors include people’s biased concern with risk of loss over reward and the emotional back story, or story-telling associated with a product. They also include subconscious biases and needs linked to personal history with the product category and what is going on while the purchase is being considered or made.

While some marketers have known about these “irrational factors” for a long time, most small business owners, and particularly military surplus vendors, don’t seem to take advantage of the opportunities such “Buying Influencers” create. Here are some examples:

  • It has been shown over and over again by tests and vendor experience, that if you associate a compelling war story with a piece of military clothing or equipment, a buyer is not only more motivated to buy – even at relatively high prices – but will also spend more.
  • “I love combat boots because a past college girlfriend always wore combat boots. I’m always encouraging my later girlfriends to wear combat boots and I buy them frequently myself without quite knowing why.”
  • You have owned an old Army shirt for years and love it. You suddenly get the urge to buy several more for yourself or friends because the surplus store you are visiting has a display talking about your faithful old Army shirt.
  • Buyers make substantial purchases if they can be convinced that what they are buying will reduce their risk of loss. Of course survivalists are a prime candidate for this kind of positioning but also people can be swayed to buy a sleeping bag, emergency supplies a warm coat or fatigues by hearing from you that “you never know when you might need them in the event of a disaster” and a personal story to go with this statement.

People often buy when you point out the quality and durability that goes into military equipment compared with what the civilian sector produces, and that means less risk of getting something that won’t last very long.

An example of a good display or pitch: Tell your customers how the government does not need to make a profit in disposing of surplus equipment so the wholesaler or retailer can sell it with a much smaller markup than civilian products. This indicates to the cautious consumer that they are not getting ripped off by high markups when they buy from your surplus store.

In summary, if you have never looked at your customers from a Behavioral Economics point of view, we suggest you find out more about this fascinating field of study. It will help you boost your income and sales and can tell you a lot about your customers – to your advantage – that they probably don’t even know about themselves.

A good place to start if you have the time and interest in reading a book is Thinking Fast and Slow by Daniel Kahneman.

Kahneman’s work is a very easy to understand discussion about the background of Behavioral Economics and its findings to date. It looks at a series of experiments that challenge the assumption of traditional economics and marketing that people are rational. It also explores the different types of thinking we engage in that may cause us to do seemingly irrational things. Here is an example of the many positive reviews this book has received:

“Brilliant…It is impossible to exaggerate the importance of Daniel Kahneman’s contribution to the understanding of the way we think and choose. He stands among the giants, a weaver of the threads of Charles Darwin, Adam Smith and Sigmund Freud. Arguably the most important psychologist in history, Kahneman has reshaped cognitive psychology, the analysis of rationality and reason, the understanding of risk and the study of happiness and well-being …A magisterial work, stunning in its ambition, infused with knowledge, laced with wisdom, informed by modesty and deeply humane. If you can read only one book this year, read this one.” — Janice Gross Stein, The Globe and Mail

Understanding how people make choices when they buy will help you sell to all kinds of people. While I am not suggesting that as small business people we try to manipulate people into making ill-advised purchases, I do believe Behavioral Economics can help you be more responsive to your customer and potential customer wants and thereby create a win-win situation.


Amazon Link for Kahneman’s book:

A review article that summarizes the book: