Meaning of Consumer Behaviour
The study of consumer behavior pertains to how individuals, groups and organizations select, purchase, use, and dispose of goods, ideas, or experiences to satisfy their needs and wants. When evaluating, acquiring, using, or disposing of goods or services, consumers engage in a decision process and physical activity.
Data collected from Consumer Behaviour studies provides an in-depth look at these clients. The study includes demographic information and other elements. By understanding why consumers purchase particular goods and services, marketers can determine which products are hot and which are dated.
Scope of Consumer Behaviour
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A) Demand Forecasting
Consumer behavior can be used to forecast business demand. By understanding customer behavior, businesses can identify their needs and wants. This allows them to discover their unfulfilled needs and demands.
A business can design products that meet customer needs if they understand what they need. By analyzing their behavior, they will be able to forecast demand for products.
Identifying their market opportunities will be easier. Forecasting demand for products requires an understanding of consumer behavior. Furthermore, it can help the company identify the market opportunity available to them.
B) Selecting The Target Market
Understanding consumer behavior can help identify target customers. A study of customer behavior identifies all customer segments with unique and distinct needs.
The study can help segment the total market into various groups. In order to better serve customers, businesses should group customers and identify their needs.
This will allow the business to design their products better in accordance with the needs and wants of their customers. Businesses will be able to see who their target customers are and what they want.
C) Market Mix
Every business needs to design an accurate mix of factors such as product, price, location, and promotion. Customers can use it to find out what they dislike and what they don’t get.
The purpose of this is to help marketers design an optimum marketing mix to improve the effectiveness of their marketing strategies. By creating the proper marketing mix, marketers can attract more and more customers, leading to increased profits.
D) Assists In Designing Product Portfolio
A business’s product portfolio is one of its most challenging components. Each business should design a portfolio that includes all classes of products.
Consumer behavior helps identify the type of product and the requirements of individuals. It is therefore possible to design products according to people’s needs and include them in the product portfolio of a company.
By developing an optimum product portfolio, businesses can serve their customers better and design the best product portfolio.
E) Marketing Management
Marketing plays a crucial role in the successful operation of every business. The business will be able to formulate effective marketing strategies with a better understanding of customer needs, problems, and expectations.
It is possible for a company to attract more and more customers if it is able to do marketing effectively. Businesses can gain better insight into their customers if they are able to understand their behavior. Businesses will be able to conduct their marketing more effectively as a result.
Managers who are effective understand the importance of marketing for their firm’s success. The success of any marketing program depends on an understanding of consumer behavior.
The Marketing concept serves as a cornerstone of many marketing managers’ philosophy of business. The Marketing concept involves three interrelated orientations: the needs and wants of consumers, company integration, and brand positioning.
F) Non-profit and Social Marketing
It is not uncommon for even non-profit organizations such as government agencies, churches, universities, and charitable organizations to market their products and services to the target audience of consumers or institutions.
These groups are sometimes required to appeal to the public for public support of particular causes or ideas. These groups also work towards eradicating the social problems in society. In order to be successful, it is important to understand consumer behavior and decision-making processes.
G) Government Decision Making
The relevance of consumer behavior principles to government decision making has increased in recent years. The two main spheres of activity affected include:
- Government services: Government provision of public services can benefit significantly from an understanding of their consumers, or users.
- Consumer protection: There are many agencies at all levels of government involved with regulating business practices for the purpose of protecting the welfare of consumers.
H) Demarketing
Consumers have increasingly come to understand that some natural resources, such as gas and water, are becoming scarce. Promotions have emphasized conservation over consumption in response to this scarcity.
Consumers have also been encouraged to decrease or stop using particular goods that are believed to have harmful effects in some situations. Drug abuse, gambling, and other types of conception can be reduced by such programs.
Government agencies, non-profit organizations, and other private groups have taken these actions. “Demarketing” is an effort to encourage consumers to use less of a particular product or service.
I) Consumer Education
Directly benefitting from an investigation of their own behavior is the consumer as well. This can take place on an individual basis or as part of a more formal education program.
Consumers may be more willing to plan an effort to save money if they learn that a large percentage of the billions spent annually on grocery products is spent on impulse purchases rather than according to a pre-planned shopping list.
Marketers have the ability to influence consumers’ purchases, so consumers can comprehend how their behavior impacts their own.
Marketers can identify how customers spend on their buying decisions by studying consumer behavior. Marketers can easily help their customers improve their buying decisions by understanding their behaviour.
They can direct them to better options available on the market and suggest ways to save money. Based on their behavior, they are made aware of different opportunities.
Other Topics Related to Consumer Behaviour
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Consumer Behavior Definition
An individual, group, or organization’s behavior related to purchases, uses, and disposals of goods and services is called consumer behavior. Consumer behavior refers to a consumer’s emotions, attitudes, and preferences that affect their buying choices.
The key to a successful marketing strategy is understanding consumer behavior. It is essential to fully understand the needs and expectations of the consumers you want to influence before implementing a strategy. Your marketing strategy must consider how the consumer will react and be influenced.
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Types of Consumer behavior
Based on two dimensions, consumer behavior can be divided into four broad categories:
- Involvement Level
- Differences between brands perceived to be significant.
a) Complex Buying Behaviour
The complex buying behavior applies to products with high prices, few purchases, self-expressive, high risks, one-time investments, etc. Despite not knowing much about the product, the buyer takes an active role in the purchase.
He researches the product from different sources, including the company website and sales representatives, and takes advice from friends, experts, and acquaintances, so that he makes the best decision possible.
A consumer evaluates the alternatives and develops a belief and attitude about the product before making a final decision about buying and investing.
| Example of Complex Buying Behaviour | Buying a House, Car, Education Course,etc |
b) Dissonance Reducing Buyer Behaviour
There may be dissonance when the product is expensive, less frequently purchased, and has a high risk, causing dissatisfaction when the consumer fears that he/she might regret the purchase if he/she discovers that other brands offer a better quality and durability product than this one.
This behavior is primarily intended to reduce post-purchase dissonance, resulting from dissatisfaction with previous purchases. Due to the limited choice and high involvement, the customer is unable to identify the differences between various products offered by various brands.
Prior to making the final purchase, he gathers information from different sources and compares and evaluates the alternatives.In addition to price, specifications, availability, and convenience, the product is selected based on these factors.
| Example of Dissonance Reducing Buying Behaviour | Buying a Financial product like Insurance, Buying a diamond ring,etc. |
c) Habitual Buying Behaviour
Habitual Buying Behaviour occurs when a product is economical and frequently purchased, but the consumer has less involvement in which brand they choose. Thus, brand familiarity and availability are the only factors considered before making a buying decision.
A strong brand loyalty is not required for such items to be purchased instead, people buy them out of habit or familiarity with the taste.
| Example of Habitual Buying Behaviour | Purchasing Everyday products like Grocery Items (Rice, Flour,etc) |
d) Variety Seeking Buying Behaviour
Switching brands is not due to dissatisfaction with the previous purchase, but due to variety, i.e. trying something new to avoid boredom. After a little evaluation, the buyer makes the purchase and develops an opinion about the product after consumption.
The concept of Consumer Behavior encompasses a wide range of factors, not just the actual buyer of the product and the act of buying, but also the various roles played by different individuals, such as initiators, influencers, deciders, purchasers, and users, as well as the influence they have on the final purchase decision.
| Example of Variety Seeking Buying Behaviour | Buying potato chips, noodles, soap etc. |
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Objectives of Consumer Behaviour
Consumer behavior aims to understand what consumer behavior is and how consumers differ.
- A key goal of Consumer Behavior is to understand how consumer behavior is related to the marketing concept, the societal marketing concept, and segmentation, targeting, and positioning.
- A key objective of consumer behavior is to understand how consumer behavior affects customer value, satisfaction, trust, and retention.
- Consumer behavior focuses on understanding how new technologies enable marketers to better satisfy consumers’ wants and needs.
- The goal of Consumer behavior is to understand how marketers have become increasingly capable of reaching consumers anywhere they desire.
- Consumer behavior studies how the world’s economic conditions are affecting consumption instability.
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Consumer Behaviour Pattern
Before making a purchase, consumers follow a series of behaviors or patterns. Consumers begin by discovering a need or desire for a product, then complete the purchase process.
Consumer behavior patterns do not correlate with purchasing habits. After habits are formed, they become more spontaneous over time, and prints reveal a consistent mental structure.
The ways in which customers purchase are collective and provide marketers with an individual perspective, but each customer’s purchasing patterns are unique. The pattern of customer behavior can be classified into:
a) The place of purchase
Even if the items are available at the same store, most people will spread their purchases across different stores. Buying shoes and clothes at your local supermarket is a good idea. It is likely that you purchase them from clothing companies.
Consumers aren’t always loyal to a store unless it is the only one they can access if they can buy the same items in multiple stores. Marketers will be able to identify critical areas of stores by analyzing customer behavior through their preferences of location.
b) Items bought
By analyzing a shopping cart, marketers can gain valuable insights into what products were purchased and how they were accepted. A large number of essential items can be purchased in large quantities, while luxury items are purchased less frequently and in smaller quantities.
Product prices are influenced by factors such as perishability and the buying power of the buyer, units of sale, prices, and the number of customers who will purchase the product.
c) The purchase time and frequency
Especially in this age of e-commerce, where everything is just a click away, customers will shop and expect service when it is convenient for them.
In order to fulfill these requirements, the store must identify patterns in purchases and adjust its services accordingly. Remember that seasonal variations and regional variations need to be taken into account.
d) The method of purchase
It is possible for customers to purchase items in a store or online using a credit card or via delivery. Buying online, for example, can lead to a shipping charge, which may increase the buyer’s expenditures.
Buying habits also reveal something about the type of customer. Information about the customers’ buying patterns will help you discover how to get them to buy more frequently, more often, and at higher prices.
Review all the information you’ve already gathered about your customers. Analytics of your online store hide the buying patterns, and you can search for information on your own or use tools in your eCommerce platform to analyze the patterns automatically. [/bg_collapse_level2]
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Approach of Consumer Behavior
a) Cognitive approach to consumer behaviour
Cognitive approaches to consumer behavior emphasize the consumer’s ability to process information. Specifically, according to cognitive approach environment and social experiences provide individuals with abundant information to be processed, and the outcome of information processing results in individuals behaving in certain ways as consumers.
People can be influenced to behave in certain ways by information about a forecasted economic downturn at a national level, for example.
However, cognitive approaches suggest consumers may lower their spending budgets in response to the stimulus even though the forecasted recession has not yet occurred.
b) Behaviourist approach to consumer behaviour
Behavioral approaches to consumer behavior, however, focus on the impact of external events. According to Lantos, these experiments also involved developing certain behavioral patterns via external factors and were carried out by Russian scientist Ivan Pavlov.
This approach is well-executed in Nescafe’s marketing efforts. The integrated marketing strategy of Nescafe aims to encourage its target customer segment to consume a cup of coffee first thing in the morning as part of their morning routine.
c) Psychodynamic approach to consumer behavior
All psychological theories that view human behavior as an interaction of forces within the person, particularly the unconscious, as well as between different personality structures, are included in the psychodynamic approach to consumer behavior.
Psychodynamics and behavioral approaches are related to each other to a certain extent within the boundaries of consumer behavior, but the former encompasses a broader scope.
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Determinants of Consumer Behavior / Factors influencing consumer behaviour
Economic Determinants |
Psychological Determinants |
Sociological Determinants |
| Personal Income
Family Income Consumer Income Expectations Consumer Liquid Assets Consumer Credit Level of Living Standard |
Motivation
Perception Learning Attitude Personality |
Family
Reference groups Opinion leaders Social class and Caste and culture |
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Significance of Consumer Behaviour
a) Marketing concept implementation:
Modern marketing concepts are implemented through consumer behavior. As a customer-driven marketing concept, modern marketing aims to solve the problems and satisfy the needs of customers.
The consumer behavior helps in identifying the same problems and needs, thus enabling the product to be developed according to the needs of the customer.
b) Market segmentation and product differentiation:
Because the product has been developed based on proper research and consumer behavior analysis, it will be the only one of its kind after identifying consumer behavior.
As a result, it will be different from all other products available on the market while satisfying the consumer’s needs at the same time.
A proper study of consumer behavior is necessary for dividing the target market into different segments in order to better target different consumers.
c) Distribution channel selection
It is important to understand that Consumer Behavior Analysis not only reveals what consumers want to buy, but also from where they prefer to buy it.
Consumers may be categorized in different ways. Online shopping is the preferred method of shopping for the first category, offline shopping is preferred by the second category, and ordinary shopping may be acceptable to the third category. We can therefore determine how much to focus on certain distribution channels based on consumer behavior.
d) Developing promotional techniques:
Advertisements, media, direct sales, online sales, and direct marketing are all examples of promotional techniques. In order to understand consumer psychology towards different promotional formats, a proper analysis of consumer behavior is necessary.
Depending on the type of advertisement and promotion, this will indicate how much influence a certain type of advertisement has on a consumer.
e) Price vs. Quality Trade-Off:
Consumer behavior studies can reveal whether the target consumers focus more on the product’s quality or its price. Marketers can use this data to devise pricing strategies and programs designed to upgrade the quality of the organization’s products to suit consumer needs, habits, and behaviors.
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Nature of Consumer Behaviour
a) Consumer Behavior is Complex in Nature:
Marketing has to target customers according to their needs, since everyone has different needs and desires. As a result, finding every individual’s pattern becomes a complex task for marketers.
b) Consumer Behavior Varies for different consumers:
The needs and desires of different consumers differ. It is therefore impossible for marketers to target every consumer. To identify their target consumers, marketers try to identify their products and services.
c) Consumer Behavior is Dynamic in Nature:
Each consumer’s behavior and mentality evolves over time. It is therefore possible for marketers to find any former customer who once hated their products.
d) Consumer Behavior is Influenced by various factors:
Friends, family, culture, lifestyle, and other factors also influence consumer behavior.A good example would be people promoting different products among their peers due to their satisfaction with them.
e) Consumer Behavior is Important for Marketers:
For marketers, consumer behavior is very important, as they have to develop their products based on whether consumers are willing to purchase them.
f) Consumer Behavior develops Brand Loyalty:
It is common for consumers to purchase products and services from certain organizations for a variety of reasons. Even if their rival performs better on the market, they develop a brand loyalty toward these organizations.
f) Consumer behavior reflects Status:
Status influences and is reflected in consumer buying behavior. Others consider those who own luxury cars, watches, and other items as higher status consumers.
g) Consumer Behavior has Spread Effect:
It is possible for one person’s buying behavior to influence the buying behavior of another. Clothing, watches, and other items may always be preferred by customers.
Some of his friends, neighbors, and colleagues may be influenced by this. It’s for this reason that marketers use celebrities like Shahrukh Khan and Sachin as brand ambassadors.
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Consumer Behaviour MCQ
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I am Smirti Bam, an enthusiastic edu blogger with a passion for sharing insights into the dynamic world of business and management through this website.
I hold a MBA degree from Presidential Business School, Kathmandu, and a BBA degree with a specialization in Finance from Apex College,
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