1.2 Defining Consumer Behavior and Its Importance

Defining Consumer Behavior

Consumer behavior interrelates with all marketing activities. Companies often focus solely on consumer behavior at the time of purchase. However, consumer behavior is much more complex than a single-instance issue. We must also understand how consumers behave while they select, use, and dispose of our products, services, and experiences. Other key factors of consumer behavior include where, when, why, how much, how long, and how often someone consumes a product or service.

While consumer behavior directly connects to psychology, it also delves into the fields of sociology, anthropology, ethnography, and economics. Internal psychological and personal factors as well as external sociological and environmental influences such as family, culture, peers, and media greatly impact how a consumer behaves.

Meet the Customer

We use the term consumer behavior rather than customer behavior because customers have the option of reselling the products or services they purchase. Customers are always the individual entities or organizations that buys your goods, but they may not necessarily use them. In other words, an uncle who buys his favorite nephew a Beatles T-shirt as a birthday gift is our customer, not our consumer.

Meet the Consumer

Let’s say that the uncle likes our Beatles T-shirt so much that he decides to buy one for himself and attend a Beatles cover band concert with his nephew. In this scenario, he has moved in our supply chain from a customer just exchanging money with us to an end user wearing our apparel. As marketers, we want to initially attract our customers, but we must always remember who our customers’ end user is when we create our marketing strategy.

Importance of Consumer Behavior

With 66% of consumers expecting companies to understand their needs and expectations, marketers must be more than good at grasping the importance of consumer behavior; we must excel at it.2 So how do marketers find success with their products and services through consumer behavior? We must understand several key concepts:

• Every consumer has different thought processes and attitudes.

• A consumer’s thought processes and attitudes evolve with changing trends.

• Every consumer has unique likes, dislikes, and expectations.

Marketers who master these concepts can make better decisions in these eight areas:3

1. Differentiating Consumers. When you group together consumers with similar demographics and needs, you can better design and target your marketing campaigns.

2. Retaining Consumers. Companies may excel at understanding consumer behavior to attract new customers but fail to leverage consumer behavior to encourage customers to repeat purchases of products and services. Understanding consumer behavior will help companies identify products similar to a consumer’s past purchases.

3. Designing Marketing Campaigns. Marketing campaigns designed without consumer behavior in mind will not be able to stand out in a competitive advertising landscape. When you understand customer motives and target groups, you can create better responsive logos, promotions, and packaging.

4. Predicting Marketing Trends. Both emerging and seasonal consumer behavior trends can shift and inform decision-making about new product launches, merchandising initiatives, and campaigns.

5. Gaining Competitive Advantage. You can analyze why consumers are purchasing from your competitors to identify what specific features of your products and services you need to improve. Conversely, you can also identify areas where your products and services are excelling compared to your competitors and leverage those areas in marketing campaigns.

6. Innovating New Products. Seventy-six percent of new product launches fail.4 Conducting focus and test groups on consumer behavior can help marketers understand how to better develop new product branding and messaging before their official launch.

7. Staying Relevant in Your Market. Continuously listening to your consumers’ evolving needs as they sift through a sea of growing choices will ensure that your company stays relevant to the benefits consumers are seeking in products.

8. Improving Your Customer Service. Customer service is not one-size-fits-all. Creating an individualized customer service strategy according to consumer demographics and needs will ensure a higher percentage of purchases.

Consumer behavior analysis is a vital tool for understanding your customers. Exploring consumer psychology can help companies create new products and marketing campaigns and increase profitability.