Before customers make a purchase decision, they usually recognize that they have an unsatisfied need. This need can be functional and/or psychological. A functional need example may be that Tom ran out of toothpaste and he went out to buy a new one; Tom bought the toothpaste for its functional use. While psychological example might be that Katie has a lot of skirt and she still bought a new one because it is very pretty.

Of course, if a company knows how to maximize current and potential customers’ functional and psychological needs, it would definitely increase its sale. Nevertheless, what I have observed is that the more luxury the product is, the more it is to satisfy customer’s psychological needs. For instance, when a female customer buys a Chanel bag, she most likely owns a lot of bags home; and this new Chanel bag is not her only luxury bag. Plenty of luxury brands are doing very well in satisfying customer’s psychological needs. If we think about Hermes, lot of Hermes bags are in limited editions and only VIP customers have the opportunity to see the actual bags. On the other hand, when a female customer buys a cup, there is a greater likelihood that this customer actually needs this cup to drink water at home. A cup business company designs the cup pretty and handy so as to attract its customers.

Certainly, there are some exceptions with this tendency. What we can conclude, however, is that people buy because of their functional and psychological needs. Either one of them or both of them will make customers purchase. If a company wants to increase its sale, learn whether its products are of psychological and/or functional needs, and work towards those needs.