Definition: Consumer behaviour defines the purchase decision-making pattern of an individual or an organizational buyer. It depicts the complete process of need generation, search, procurement, utilization and post-usage review of a product or service by a consumer.
It is the core of marketing since without knowing what the consumer wants, a company cannot plan its production.
Content: Consumer Behaviour
- Types of Buyers
- Consumer Buying Process
Types of Buyers
While we understand the pattern of consumer’s buying decision, we must know the category in which a buyer falls.
Based on the spending ideology of the people, we can discriminate them into the following three types:
- Spendthrifts: One of the easiest targets for marketers are spendthrifts. These are people who reluctantly spend on the products they find appealing.
- Unconflicted: People who value money and buy those products which they find useful and worth spending, are the unconflicted buyers.
- Tightwads: The people who hardly spend their money on buying stuff, rather have a savings mentality are termed as frugalistas or tightwads.
Consumer Buying Process
Before going through the details of consumer behaviour we must first understand how a buyer proceeds while making a product purchase:
- Need Recognition: In a buying process, everything starts with the buyer’s need or urge for a product or service.
- Information Search: Next, the buyer tends to seek knowledge about the product features or specifications which are essential to fulfil his/her need.
- Evaluation of Alternatives: Then the buyer looks for the various options and brands available of the desired product, whether offline or online.
- Purchase Decision: Being satisfied with the features, price, quality, quantity and other attributes of the product offered by a particular brand, the buyer makes a purchase.
- Post Purchase Response: This is the step where the customer feedback acts a game-changer. A happy consumer can mouth publicize the product in their connections; however, a dissatisfied customer can discourage many other prospective buyers.
Factors Influencing Consumer Behaviour
Consumer behaviour cannot be studied in isolation since it is driven by a number of internal and external factors which are described below:
Personal Factors: The personal constraints of an individual are the key player in their purchase decisions. It includes age, gender, education, earnings, savings, family income, lifestyle, marital status, occupation and goals.
Psychological Factors: Equally important is what the consumer thinks when it comes to a product or a brand which can be seen through his/her attitude, perception, believes, learning and motivation.
Social Factors: The impact of social factors comprising of a person’s status, role, peers, family and reference group can mould the buyer’s decision.
Cultural Factors: The basic learnings and understanding of an individual are developed by his/her social class, culture, religion, customs, nationality and beliefs.
Technological Factors: Technology such as automation, information and communication as well as research and development affects the buyer’s mindset in several ways.
Situational Factors: The prevailing conditions and expected change in a situation have a significant impact on the buyer’s mindset and purchase decision.
Marketing Factors: The marketing mix components i.e., product, price, packaging, positioning, place and promotion should be planned smartly to attract buyers.
Geographical Factors: The place where a consumer resides, visits or stuck in plays a key role in his/her buying behaviour. Since, the various constraints such as accessibility, availability, affordability are to be taken care of.
Nature of Consumer Behaviour
To unwrap the essence of consumer behaviour, we should have a clear idea of the following points:
- Brand Loyalty: This is a key representation of consumer behaviour as the people are more brand conscious at times and prefer to purchase multiple products of a particular brand.
- Differ for Each Consumer: Every consumer thinks differently when comes to product or brand selection. Therefore, consumer behaviour varies from one individual to another.
- Dynamic: It is not necessary that the past information about consumer behaviour remains relevant today or shortly. The buyers’ ideology changes with time and circumstances.
- Marketing Essential: A company’s marketing functions completely rely upon the stats and information gathered from the consumer behaviour analysis. It starts even before the production function begins.
- Complex: Since the consumer base is diverse and widespread, it becomes difficult to understand their buying pattern. Also, identifying the target group and focusing on their requirements is a complicated affair.
- Influenced by Different Factors: As discussed above, consumer behaviour is impacted by the various internal and external factors such as personal, psychological, social, cultural, technological, geographical, situational and marketing factors.
- Human Aspect: Consumer behaviour is the analysis of a buyer’s ideology, therefore, human aspect plays a key role in this concept. Hence, understanding of human behaviour is elementary in such research.
Scope of Consumer Behaviour
Consumer behaviour is widely applied across different areas of business. Starting with the decision of what to produce up to product development, everything depends upon this particular research.
The extent of consumer behaviour application can be seen as follows:
- Marketing Management: Consumer behaviour helps the marketer to know the requirements, determine a suitable marketing technique.
- Human Behaviour: It decodes a complete picture of how consumer behaviour is impacted by human behaviour which also varies from person to person.
- Consumer Decision-making: Consumer behaviour interprets the decision-making pattern of a buyer. Since what a buyer picks from the pool of products is a decision driven by multiple factors.
- Demand Forecasting: One of crucial analysis is that of predicting demand for a product or service. It can be simplified by understanding the consumer’s buying pattern and reaction to a certain brand or product.
- Advertising: While guiding a company’s advertisement drive, whether it is adopting the viral marketing strategy, launching an infomercial, going for a holistic marketing approach or anything else, knowing the consumers’ ideology makes it a success.
- Business Operations: When it comes to streamlining the business functions like framing policies regarding raw material, production, packaging, pricing and distribution, everything should be executed keeping in mind the consumer’s buying behaviour.
- Consumer Education: Today’s consumers are smart enough and therefore, a marketer should focus more on parting product education rather than pitching it to the customers. Thus, figuring out the buyer behaviour facilitates embedding an appropriate consumer education.
Importance of Consumer Behaviour
Over the last few years of changing marketing scenario, consumer behaviour has secured a critical position in the present information era.
Given below are some of the significant behind consumer behaviour interpretation:
Market Trend Analysis: Consumer behaviour guides the marketers in the direction of prevailing market trends. It aids the companies to figure out what the consumers mobed by, whether it is the latest technology, health concern, eco-friendliness or social responsibility.
Consumer Differentiation: Understanding consumer behaviour is significant to identify the different buying patterns of the customers. This helps to segregate the target consumers who behave similarly so that they can be converted into buyers through an effective marketing strategy.
Enhance Customer Experience: The overall customer experience can be upgraded by working on the details gathered through consumer behaviour analysis. It not only defines the customer requirements but also figures out the competitor’s strategy and marketing mix.
Ensure Customer Retention: When the company knows exactly what the consumers are looking for, and develop a relevant product, there is a higher rate of conversion of prospective buyers into customers. Even on being satisfied with the product, such consumers would not only become loyal towards the brand but will also recommend it in their network.
Stay Competitive: The companies use consumer behaviour data to mould their competitive strategies. It brings out the reasons for which the consumers are inclining towards the competitor’s product, thus facilitating the necessary improvements to the product or service.
Introduce New Product: Before coming with a fresh idea or a new product launch, companies prefer to spend significantly on consumer behaviour analysis. This is because it helps the marketers to anticipate the product demand, competition, pricing and other necessary aspects.
Direct Marketing Campaigns: Right from product’s appearance, features and packaging to its promotion and marketing programmes, all these are backed by a strong interpretation of consumer behaviour.
Types of Consumer Behaviour
The type of consumer behaviour varies across two major parameters, one is the brand differentiation while the other being the level of buyer involvement.
Let us fathom the following representation of four prominent forms of consumer behaviour identified so far:
Complex Buying Behaviour
When a consumer buys once in a lifetime product or something quite expensive, the level of involvement is pretty high in such a purchase decision. Therefore, to convince such a buyer, the marketers should be able to differentiate their brand or product significantly from the competitors in this case. For example; a car.
Variety Seeking Buying Behaviour
In such products, there is low customer involvement however the products offered by different brands are highly contrasting. The buyers switch between different brands or products to experience something new. For instance; biscuits.
Dissonance-reducing Buying Behaviour
Sometimes, the product is highly expensive demanding a high involvement of the buyer. Although, due to scarcity or limited options, along with minor product differentiation between the available brands, the customer has to go with whatever is available. For example; an iPhone.
Habitual Buying Behaviour
Buying the regular stuff (of low value) lie in this category, where the buyer involvement is pretty low and the brands pertaining in the market are selling identical products. For instance; detergent powder.
Consumer Behaviour Theories
There are numerous consumer behaviour models both traditional and contemporary. Although we are going discuss the five most common ones out of these:
Maslow’s Theory of Motivation: One of the renowned theories is this one, which represents the consumer needs in the form of a hierarchy. Where the pyramid’s bottom-most level comprises of physiological needs, then moving upwards to safety, social needs and esteem. Finally reaching the peak i.e., self-actualization needs.
Howard-Sheth Model: The Howard-Sheth model studies the impact of various psychological, social and marketing factors over the buying decision of a consumer. It analyzes the input, information processing and output derived by the buyer while proceeding with a product purchase.
Economic Theory (Marshallian Model): This model considers the law diminishing marginal utility as a determinant of consumer behaviour. It focuses on the way a consumer allocates his/her limited resource to generate the highest possible utility. It studies the effect of price, income and substitution on consumer behaviour.
Psychoanalytic or Freudian Theory: The psychoanalytic theory pitched the role of the unconscious mind on what a consumer buys. It reveals consumer decision-making as a combined effort of the id (impulsive and primitive part), ego (realistic part) and superego (moral sense) which are the different consciousness levels of an individual.
Learning Theory (Pavlovian Model): This model identifies the four key forces i.e., drives (internal stimulus), stimuli (inputs stimulating motives), cues (signal) and responses (reaction) which have a significant impact on the consumer needs and behaviour.
Consumer Behaviour Limitations
When it comes to the implementation of consumer behaviour analysis in business, the companies face multiple hurdles. Some of these drawbacks are enlisted below:
- Lack of Buyer Interest: Sometimes, the buyers are hardly bothered about the brand or features of a product due to its minimal significance. In such cases the buyer involvement is extremely low, thus it becomes difficult to gather data for analysis.
- Misleading by Marketers: Some companies or their marketing teams go the wrong way to promote their products or services by adopting objectional marketing techniques. This false demand creation misleads the consumer behaviour research.
- Social and Cultural Impact: The society and the upbringing of an individual influence his/her buying behaviour. Many times, people reject a certain product or brand due to social pressure.
- Inconsistency: As we know that the consumer behaviour is dynamic which may change with time and different product offering, therefore applying the same analysis may not always work.
- Complicated Analysis: It is quite complex to predict the ideology of the consumers since every customer responds differently when comes to their purchase decision.
Consumer behaviour is a systematic analysis of what makes a buyer to select a certain product and let go the others. A company that centralizes consumer behaviour analysis in its business, would come out as a winner in a highly competitive market, sooner or later.