“The aim of marketing is to know and understand the customer so well the product or service fits him and sells itself”, this quote from Peter Drucker places the emphasis on how crucial it is for businesses to have a good understanding of the consumer base they are dealing with, thus puts us in front of one of the key concepts in marketing, which is “consumer behavior”.
Consumer behavior is the study of people’s purchase-related activities and how the consumer uses and disposes of different products and services. Purchase decision-making is an entire process that gets influenced by different internal and external factors that could be psychological, social, or emotional, marketers study these different factors and their impact on consumers’ purchasing behavior in order to have a better understanding of what they want and be able to meet their expectations.
Types of consumer behavior:
- Complex buying behavior: occurs when the product is expensive and infrequently bought, the consumer, in this case, is highly involved in the purchase process and the decision-making takes a considerable period of time.
- Dissonance-reducing buying behavior: happens when consumers are highly engaged with an infrequent, expensive, or risky purchase and have difficulties determining the differences between brands, so they worry that they will regret their choice.
- Habitual buying behavior: the consumer has very little involvement in the purchase because it’s not very expansive or risky and because he already knows the brand and the product well.
- Variety-seeking behavior: when there are significant brand differences and the cost of switching products is low, the consumer may purchase a different product not because they weren’t satisfied with the previous one, but just because they seek variety.
What affects consumer behavior?
- Economic conditions: good economic conditions give consumers confidence and encourage them to spend more, while when the economy is struggling, whether it’s a recession or inflation, the consumers lose confidence and become less willing to indulge in purchases, especially expensive ones, as they become riskier.
- Social influence: our social circle, including family and relatives, classmates, co-workers, neighbors, and acquaintances, has a direct impact on us, our personalities, and the way we think, therefore playing a significant role in our decisions.
- Purchasing power: the first thing we all consider before making a purchase decision is our budget. No matter how good the product is and how perfectly it fits your needs, if you don’t have enough money to buy it, you won’t buy it.
- Psychological factors: although psychological factors aren’t exactly easy to measure they, consciously or subconsciously, prompt our purchasing decisions and drive our buying behavior. Our decisions are not always 100% rational, sometimes we link some products with particular emotions, feelings, or beliefs.
Consumer behavior analysis:
Erstwhile marketers used to rely on past experiences and their own intuition in order to understand the customer and their purchasing behavior. The insights gathered from these classical methods are limited and don’t help us build a clear image of the consumers, today’s data-driven marketing makes this mission easier for marketers as it provides them with insights and trends based on in-depth analysis informed by numbers.
A consumer behavior analysis studies qualitative and quantitative variables and looks at how consumers engage with brands. The analysis goes beyond the act of buying, it delves into the why, when, how often– and much more as it aims to understand details like how frequently customers shop, which products they prefer, and how they perceive your marketing, sales, and customer service offers, what motivates them to consume,…
A consumer behavior study elucidates the various factors that impact an audience. It offers you an insight into the customer’s motivations, goals, and decision-making procedures as they go through their journey. This study might help you figure out how consumers feel about your firm and whether or not that feeling is consistent with their basic beliefs.
Customer behavior segmentation
Traditional customer segmentation focuses on who the customer is and takes into account demographic attributes such as gender or age, but it turns out that knowing who your customer is ain’t enough, this is why behavioral segmentation focuses on patterns of behavior displayed by customers in order to understand them and expect their future actions.
Customers are initially divided into buyer personas based on their shared traits. Then, each group is monitored to see how the personas engage with your firm.
Here are some of the most relevant behavioral segmentation methods:
- Benefits sought: when a consumer is looking for a product or a service, there must be a certain benefit or value on which they place a much higher focus, that is the primary benefit(s) they are seeking during the purchase decision. Different customers privilege different benefits in the same product thus the motivating factors driving the purchase decision differ from one consumer to another.
- Customer journey stage: The five phases of the customer journey are Awareness, Consideration, Purchase, Retention, and Advocacy. Determining in which stage of these is your customer allows you to align communications and personalize experiences to make sure they always get to the final stage and remain there.
- Usage: The usage rate or the frequency at which a customer uses your product. How often (and how much) a customer uses your product or service can be a strong predictive indicator of loyalty or churn and, therefore, lifetime value.
- Occasion or timing: When are customers most likely to make a purchase or engage with a brand? this refers to universal occasions(new year’s eve, Christmas, Ramadan,…) and personal occasions(birthdays, engagement anniversaries,…)
- Customer Loyalty: your loyal customers are such a valuable asset, that’s why you should distinguish them from the rest and treat them the way they deserve, by offering them exclusive rewards programs to nurture and strengthen their relationship with the brand and turn them into your advocates. Businesses work on taking advantage of the fact that loyal customers are cheaper to retain and usually have the highest lifetime value.
- User status: Every consumer out there is either: a non-user, a prospect, a first-time buyer, a regular user, or a defector (ex-customer who has switched to a competitor). Your communication and offers should vary depending on the user status.
Why is it important to study consumer behavior?
Conducting a consumer behavior study is an indispensable tool in modern marketing as it gives you a lot of advantages and puts you ahead in the competition.
Studying the consumer behavior will get you to understand how the consumers make the decision of purchasing a certain product, why do they choose a particular good or service, when do they spend the most, what exact qualities are they seeking, and much more details about their beliefs and habits when it comes to buying, to enable you to expect the market’s needs and provide clients with the products/services they need at the right time and communicate your offers through the proper channels, all of this in the sake of optimizing the customers’ experiences and make them want to come back every time.
Once you have a good understanding of the different behavioral patterns displayed by consumers, you would think of how to use this knowledge in your favor and try to influence and shape consumers’ behavior rather than just observing and reacting to it.