Having a fantastic product isn't enough to ensure long-term sales stability. Yes, you heard that right!
In fact, it's all about addressing customers' wants, getting to know their needs, and speaking to them in ways that entice them to engage. In order to achieve these, marketers use a variety of reports, surveys, and tools to gain a better understanding of one thing: consumer behaviour. We've seen time and time again that those who make the best use of the understanding of customers' behaviour and connect their marketing strategies with the data are the ones who succeed. But what is consumer behaviour, and why is it important to your company?
Consumer behaviour is the psychological study of people and what are the processes they use to make decisions, buy, use and discard items and services to satisfy their own wants and needs. It refers to the consumer's actions in the marketplace and the motivations behind those actions. It also studies their emotional, mental, and behavioural responses and how they affect their buying behaviours.
There are a few aspects to consider when it comes to consumer behaviour, including:
Recognising the factors that impact consumers' purchase decisions, whether in person or online, can help companies to portray their brand and products in the best possible light. Customers will be more willing to part with their money if they have a great customer journey that is smooth and uncomplicated. Not only that, marketers can fill the gap in the market and identify the items that are needed and the ones that are outmoded by studying how customers decide on things.
According to a survey by Salesforce, there are up to 76% of consumers expect organisations to understand their requirements and expectations as a customer. This means that if you don't figure out what your customer wants before they can tell you, they'll most likely go somewhere else that can satisfy their wants and needs.
Consumer behaviour insights are the foundation on which successful companies develop their marketing strategy. They're not just coming up with products and marketing strategies based on their own ideas; they're also bringing in external data to figure out what customers want and how they want it, and then connecting with them accordingly. It assists marketers in determining how to promote their products in a way that has the most influence on customers. Understanding consumer buying behaviour is the key to connecting and engaging with your customers, as well as convincing them to make a purchase from you, which will help in increasing revenue. This is the essence of providing a great customer experience (CX), which is critical in building a loyal client base.
Think about it, how many times have you been in line at the grocery store and tossed one of those candies placed near the checkout counter into your cart? This is actually one of the strategies marketers came up with to get you into buying a product from them.
In order to further understand consumer behaviour, we have to first identify what are the types of consumer behaviour that individuals tend to have. The sort of goods a consumer requires, the level of involvment, and the distinctions across brands all influence consumer behaviour. There are four types of consumer behaviours namely complex buying behaviour, habitual buying behaviour, dissonance-reducing buying behaviour, variety seeking behaviour.
When customers purchase expensive, seldom purchased goods, they will be heavily involved in the purchasing process and very likely to do a lot of research before making a high-value buy.
Consider the purchase of a home or a car; these are examples of complex buying behaviour.
Habitual buying behaviour is shown when the buyer has virtually little engagement in the product they purchase or brand category.
For example, you buy new socks on a regular basis. Either because you lose them all the time or because they constantly have holes in them. You constantly running out of socks, therefore, you keep buying the one pair of socks that costs the least amount of money. It's almost become a habit for you.
The customer is actively involved in the purchasing process, yet has difficulty distinguishing the differences between brands. When a customer is concerned that they may regret their decision, this is known as 'dissonance.'
For example, you're looking to purchase a vacuum cleaner. You'll pick one based on price and convenience, but once you've made your decision, you'll want to know if you made the correct choice in purchasing.
In this case, a customer buys a different product because they want variety, not because they were dissatisfied with the prior one.
For instance, you would tend to purchase a simple black t-shirt that comes in different designs from various retailers. The reason is just that you don't want to wear the same black t-shirt every day. The price of the t-shirt is pretty reasonable everywhere, so getting three or five of them should not be a problem.
The study of how individual customers, groups, or organizations pick, buy, use and dispose of ideas, commodities, and services to meet their needs and wants is known as consumer behaviour. It refers to the consumer's actions in the marketplace and the motivations behind those actions.
Marketers expect to be able to decide which products are needed in the marketplace, which are outmoded, and how best to offer the commodities to consumers by understanding what motivates people to acquire specific goods and services.
To further understand this, here are some of the nature of consumer behaviour.
Consumer behaviour is always changing. Depending on the nature of the product, it undergoes changes from time to time. Children, for example, enjoy colourful and extravagant footwear, whereas teens and young adults want fashionable footwear, and middle-aged and older persons choose more comfortable footwear. Several additional factors, such as a rise in income level, education level, and marketing considerations, might cause a shift in buying behaviour too.
Consumers do not all act in the same way. Different consumers will behave in a variety of ways. Individual characteristics such as consumer nature, lifestyle, and culture explains why there are different consumer behaviour.
Positive consumer behaviour will eventually result in buying decisions. A consumer's choice to buy a product can be influenced by a variety of factors. As a result of the purchasing choice, demand will rise, as well as marketers' sales rise. For that reason, marketers must influence consumer behaviour in order to boost sales.
Consumer behaviour will result differently with different products. Some customers may purchase a large number of one item while purchasing a little or no quantity of another. Teenagers, for example, may spend a lot of money on items like electronic devices and branded clothing, but not on academic reading. A middle-aged individual may spend less on fashionable goods but invest in savings, insurance, retirement funds and more.
Consumer behaviour differs significantly between states, regions, and countries. The behaviour of urban customers, for example, differs from that of rural consumers. A large majority of rural consumers are cautious in their purchasing decisions.
Despite having ample finances, wealthy rural consumers may hesitate to spend on luxuries, but wealthy urban consumers may take out bank loans to purchase luxury products such as vehicles and houses. It varies based on one's upbringing, lifestyle, and developmental stage.
Generally, there are five key aspects that influence consumer behaviour, such as whether or not a target client purchases a product. Psychological, social, personal, and economic considerations are among them.
Human psychology, surprisingly, is an important component that determines consumer behaviour. The few psychological factors that influence consumer behaviour are:
It is a significant determining element that influences consumer behaviour. Maslow's theory of hierarchy of needs is a prominent motivation theory in which he constructed a model that sets the foundation for 5 different levels of human requirements, starting with psychological needs, safety needs, social needs, esteem needs, and ultimately self-actualization needs. Therefore, when we are purchasing a product, our fundamental and security needs are often being considered first.
Our perception is influenced when we receive information about a product. We build an image of the product whenever we encounter an advertisement, review, comment, or promotion for it. As a result, our perspective influences our purchase decisions significantly.
We all have some attitudes or beliefs that influence our shopping decisions, whether consciously or subconsciously. For example, whereas your buddy may favour tea because he feels caffeine is harmful to one's health, you may prefer coffee since you believe caffeine energises us. Our attitudes and beliefs impact our behaviour toward a product and help to shape the brand image of that product. As a result, marketers may make use of this aspect to better create their marketing initiatives.
As human beings, we are constantly socialising and connecting with people in our lives. And our shopping decisions can be influenced by these people around us. We continue trying to imitate other people in order to blend in with our environment. As a result, social factors have an impact on consumers' purchasing decisions. Some of these elements are:
Our families do, in fact, have a significant influence on our spending habits. We develop a preference for specific items as a result of watching our family use them as children, and we continue to use them as adults. For example, if our family members prefer Darlie over Colgate or Sensodyne for toothpaste, we will unconsciously choose Darlie as our first choice, rather than Colgate or Sensodyne.
This term refers to a group of people with whom we associate. Clubs, schools, churches, and even acquaintances or a group of friends are all examples of "reference groups". People in reference groups often have a shared purchase pattern and an opinion leader who impacts their purchasing decisions.
Roles & Status.
Of course, the position we hold in society has an impact on us all. The greater our position, the more our status influences what we buy and how much we spend. For example, the purchasing habits of a company's CEO and a regular employee are somewhat different.
Other than the factors that were mentioned before, we all have personal factors that impact the decisions that we make every day. These characteristics differ from person to person, resulting in a wide range of beliefs and behaviours. Some of these factors include:
One of the most important things that influence our choices is our age. For example, a teenager's decisions when they are shopping in a mall would definitely differ from those of an elderly person.
Our purchase decisions are significantly influenced by our profession. We all have a tendency to buy products that are relevant or appropriate for our work. A salesman, for example, would have a different clothing purchase pattern than a dancer.
The way we live our lives is one of the most powerful determinants of our decisions. Our purchasing habits are heavily influenced by our way of living. If we're on a diet, the goods we buy will help us stick to it, whether it's food, a yoga mat, or a protein shake.
A person's income has an impact on his purchasing habits. An individual's purchasing power is determined by their income, consequently, the more their personal income, the higher their expenditure on other products, and vice versa.
Consumer purchasing habits and decisions are heavily influenced by the market or the country's economic conditions. If the country is wealthy and its economy is stable, the consumers will have more power in their purchasing decisions.
A healthy economy encourages consumers to spend, but a bad economy exposes a strained market characterised by a rather weak purchasing power and a high unemployment rate. Some of the economic factors include:
This is the determining factor in how much money we will spend on products and services. A consumer's personal income is divided into two categories: disposable income and discretionary income.
Disposable income is mostly the money left over after all essential payments, such as taxes. The larger the disposable personal income, the greater the spent on a variety of things and vice versa. Meanwhile, our discretionary personal income is the money left over after we've taken care of all of our fundamental needs. This money is also utilised to buy shopping products, durables, and luxury goods. An increase in this income leads to an increase of one's standard of life, which eventually leads to increased in spending.
Our purchase habits are also influenced by the credit facilities available to us. Sellers typically give credit to buyers, either directly or indirectly through banks or financial organisations. Our consumption on things is likely to grow if we have flexible credit terms, but less flexible credit terms would have the reverse effect.
Other than the income factors that have been mentioned above, our future income expectations also have a role to play in our purchasing decisions. For instance, if we expect our income to rise in the future, we would naturally spend a greater amount of money in purchasing items. And of course, in case we expect our income to take a plunge in the near future, we would spend lesser money purchasing items.
Analysing consumer's behaviour is part of the core and important thing to do when it comes to marketing. The study of customer buying behaviour is crucial for marketers because it allows them to understand what consumers expect. It assists in helping a company to understand why a consumer would choose to buy a product. It is critical to examine the kind of items that consumers want before releasing them onto the market. Marketers may learn about their customers' likes and dislikes and tailor their marketing strategies accordingly.
At the end of the day, companies should continue to observe and communicate with their consumers in order to identify what expectations they are having and what kind of products and services can satisfy their needs and wants. Only through understanding your consumer's purchasing behaviour, you can ensure long-term sales stability for your company.