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Consumer Behavior – What Is It and Why Does It Matter for Your Business?

Consumer Behavior – What Is It and Why Does It Matter for Your Business?

Our entire life consists of purchase decisions. From what you are going to wear to your sister’s wedding, to what you plan to eat for lunch, we make buying decisions on a daily basis, without giving it too much thought.

Besides influencing our lives, these seemingly unimportant decisions are the cause of many sleepless nights for marketers. That’s because understanding the process behind these decisions is what generates revenue for brands all over the world.

When it comes to sales stability, it’s not enough for companies to just have a great product. In order for sales to grow, these products need to respond to the needs and wants of customers. No matter how revolutionary a product is, if it does not get launched at the appropriate time when the market needs it, then it has very small chances of success. It can be either because the market is saturated with products or because consumers have not grasped the need for that product yet.

Studying the market before launching a new company, service, or product is paramount, yet many overlook this aspect because they do not understand its importance. So, to make things clearer, we are going to dive deeper into the process of defining and understanding consumer behavior, as well as the benefits it can bring to a business.

What Is Consumer Behavior?

Studying consumers and the process they go through when choosing, using, and disposing of products is called consumer behavior. In this process, experts analyze the emotional, mental, and behavioral responses people have to these products and rely on principles that come from multiple sciences such as chemistry, biology, psychology, and even economics.

But how does someone gather all this information? Well, this is consumer research and focuses on discovering important information such as:

  • How consumers perceive different product alternatives
  • The process of choosing between these alternatives
  • Consumer behavior when researching a product
  • What influences consumer behavior (such as media or culture)
  • How to effectively use marketing to influence consumer behavior

There are a number of factors that influence consumer behavior; many of which can not be controlled by the company. These factors can be split into three categories:

  • Personal: personal factors include consumer interests and opinions, which can be greatly influenced by demographic aspects such as gender, culture, age, location, and so on.
  • Psychological: based on their perceptions and attitude, consumers are bound to react differently to marketing messages.
  • Social: these factors include relationships, education level, income, and, most recently, social media.

Why Is It Important to Study Consumer Behavior?

If it was not already obvious by now, studying consumer behavior helps us understand what influences their purchase decisions and how to better appeal to them. A business that understands what drives consumers to choose a product over alternatives can successfully capitalize on this information and develop products that are needed on the market.

Having a clear understanding of consumer behavior adds tremendous benefits to marketing as well. Not only will you know what types of products consumers are looking for, but also how to present these products in a way that impacts customers.

There are plenty of reasons for a company do to market research and understand consumer behavior, including:

  • Consumer differentiation: even if a brand has a clearly targeted audience, not all consumers are the same. Through consumer differentiation, brands can create separate targeted groups and tailor their marketing strategy accordingly.
  • Retention: consumer behavior matters even more when it comes to retaining existing customers. Paying attention to their behavior allows you to improve your products and maximize retention.
  • Predicting trends: by observing how consumers react to certain events of the world, you can tailor your products to better suit them. Take, for example, the environment-friendly trend that prompted many brands to shift their approach to a more environmentally conscious one.
  • Understanding competitors: studying consumer behavior will help you learn why some people prefer the products provided by your competitors and what you can do to win them over.

Understanding the Types of Consumer Behavior

Based on the type of goods they are purchasing and the aspects that influence the purchase decision, consumer behavior can be split into four categories:

  • Complex: this revolves around expensive purchases that don’t happen often, such as cars and houses. This is why consumers are more involved in researching products before they make the investment.
  • Dissonance-reducing: consumers are still deeply involved in the purchase process, but they find it difficult to choose between brands. This dissonance happens when consumers question whether or not they will regret the decision, seeking confirmation that they have made the right choice.
  • Habitual buying: consumers are not as invested in the purchase decision and make choices based on habits. Take grocery shopping, for example. The fact that you go to the store and buy the same type of yogurt every day has much more to do with habits than with brand loyalty.
  • Variety seeking: at times, consumers buy new products not precisely because they are not content with the current choice, but rather for the sake of diversification.

 

Buying Behavior Patterns

Many people confuse buying patterns with buying habits. Habits can change randomly and without any way to predict them, whereas patterns reveal a predictable set of actions. At the same time, buying habits tend to differ for each consumer, whereas buying patterns are collective.

Consumer buying behavior patterns falls into the following categories:

  • Place of purchase: even if a single store holds all the items a customer needs, we rarely buy everything in one place. That is because we are not loyal to stores, but rather to brands.
  • Items purchased: analyzing a shopping cart helps marketers understand which type of products are bought in bulk and which are purchased individually.
  • Frequency of purchase: understanding when and how often consumers buy specific products helps brands determine when to market certain products and how often to replenish stocks.
  • Method of purchase: understanding how consumers like to buy stuff allows you to be where consumers are. For example, eCommerce has gained plenty of popularity recently, which means you should consider including your products in online stores as well.

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by Rebecca Jones // Contributor to Businessing Magazine.

Opinions expressed by contributors are their own.