What is Consumer Behavior in Marketing?
In marketing, understanding consumer behavior has become very important for businesses. Consumer behavior refers to the study which analyzes how consumers make decisions about their wants, needs, buying or act with respect to a product, service or an organization. It is very critical to understand the behavior of consumers to analyze the behavior of potential consumers towards a new product or service. It is also very useful for companies to identify opportunities which have not yet been met.
An example in the aspect of consumer behavior is the change in eating habits which drastically increased the demand for gluten-free products. Businesses which have identified this market gap have produced gluten-free products and have tapped this market aspect as well. On the other side, those companies which failed in monitoring consumer behavior could not manage to fill this void in the marketplace and were left behind. Understanding the behavior of consumers allows pro-active companies to increase their market share through anticipating the shift within the consumer choice.
Definition of Consumer Behavior
Consumer behavior can be defined as the study of psychological, physical and social actions when individuals buy, use and dispose of products, services, ideas, and practices. In other words, consumer behavior is the study of how consumers will make their buying decision and what those factors which support or influence these decisions. According to marketers, by understanding the compelling reason for which a consumer buys a particular product or service over the other, it becomes easier to identify which product is in demand and which is obsolete so that marketing strategies can be designed accordingly.
“The buying behavior of ﬁnal consumers – individuals and households who buy goods and services for personal consumption” Philip Kotler
Factor affecting Consumer Behavior
Understanding how consumer behavior impacts marketing renders it vital to understand those factors which affect consumer behavior and which include:
Consumer behavior is influenced by cultural factors like social class, buyer’s culture, and subculture. There are three types of cultural factors include social class, culture, and subculture. Culture can be different by region, different groups and even countries.
Cultural shifts are always important for marketers whether marketing new products or existing products with new features and attributes. For examples nowadays cultural shift towards health and fitness has created a huge demand for exercise equipment, low calories and organic food and other fitness services. This cultural shift greatly influenced the consumer behavior throughout the world i.e. America, England and Europe and many parts of the world. People go to Gym and love organic and healthy food.
Culture is the combination of subcultures. If you are a Muslim, Hindu or Christian, your buying behavior will be influenced by different subcultures. It will affect your choice and preferences like your food, clothing, career goals and recreational activities.
Another cultural factor is the social class that can affect the consumer buying behavior in different parts of the world. For example, in the western world, both the lower class and upper might show the same buying behavior. But in other countries like India upper class have a tendency to buy luxury cars, gadgets, and personal care products. But people from the lower class are unable to spend money on these purchases.
Social factors greatly influence the purchasing behavior of consumers. Social influencers are diverse and include family, school or work communities, social interaction or any group with which an individual interacts. It also includes an individual’s social class which comprises of education level, living conditions, and income.
Social Reference. For example, Last month I was eagerly needed a laptop. I went to a nearby market and purchased a MacBook Pro laptop. What factors affect my buying decision and why I purchased MacBook Pro. It was because my closest friend already having the same brand and he is quite satisfied with this product.
Family. Family plays an important role in the decision-making process. For example, if you are a married person, you will always prefer those products that would benefit both husband and wife.
Social Role and Status. Let us understand social role and status and how it affect consumer behavior. For example, you are a Chief Financial Officer in a leading organization, you are someone’s son, husband and father. your role can also affect the buying tendency of many people.
Personal factors impact buying decisions and include age, economic situation and occupation. In considering personal factors, buying behavior is also influenced by habits, opinions and interests along with other personal issues.
Human Life Cycle Stages is another example, here marketers target markets based on the human life cycle. They will target teenagers with bright colors, loud music and fast food. A young couple will prefer to buy a retirement plan and secure their future.
Occupation and Economic Circumstances. A person occupation affects the consumer decision while buying goods and services. For example, if you are a blue-color worker you will prefer to buy more work-related clothes. On the other hand, if you are an office worker you will tend to buy smart clothes. Different types of companies specialize in making products based on occupational group. For example, a software house will develop different software for accountants, lawyers, retailers and engineers.
Marketers closely observe buyer personal income, saving and interest rate. Their marketing mix decisions are based on economic indicators. For example, The price of Nikon D-5 professional camera is over $6000, you can only purchase this camera if you enough disposable income, savings or borrowing power.
Lifestyle means how a person lives in a society. For example, you are living in a posh area and people have expensive watches, branded clothes and luxury cars. You have to maintain your status and image.
Psychological factors that impact buying decision includes perception, motivation and beliefs and attitudes. Every consumer will respond to marketing message based upon their attitudes and perceptions.
Motivation. People have different needs at a time. Some needs are biological i.e. hunger, thirst and some are psychological i.e. recognition, self-esteem and belonging. When a need reaches a certain level of intensity it becomes a motive. According to Philip Kotler, a motive is a need that has the power to direct the person to seek satisfaction.
Maslow’s Hierarchy of Needs also known as Maslow’s theory of motivation was developed by Abraham Maslow in 1943. This Maslow’s theory is based on human motivation. It is shaped like a pyramid and have a bottom to top approach. According to this hierarchy, there are five levels of human needs.
- Physiological needs consist of basic human needs like water, food and sleep.
- Safety needs consist physical safety of humans like personal, emotional, financial security
- Social Belonging and needs consist of love, friendship needs
- Self-Esteem are those needs looking for self-respect, recognition and social-status
- Self-actualization is the need for personal growth, development and realization.
Freud Theory of Motivation. This theory tells us that the unconscious psychological forces such as emotions and desires shape an individual behavior. These are three factors are Id, superego and ego.
Consumer Behavior Models
Through observation and research, there have been developed several models which further explains the buying behavior of consumers and which includes black box, personal variables as well as complex models.
- Black-box model: This model is based upon external stimulus-response which means that a point triggers the consumer’s mind to make a purchasing decision which is influenced by different factors like sampling, marketing message, promotions, product availability and price.
- Personal variables: When a consumer is influenced by personal-variable model, decisions are based upon internal factors. Internal factors may include belief systems, goals, goals, traditions, personal opinions or any other similar internal motivator.
- Complex model: Complex model includes both external and internal variables.
How to Study Consumer Behavior
Several factors affect the consumer behavior and there are some methods that are used to study consumer behavior. These methods include:
- Surveys: Surveys can be conducted on the phone, internet or in-person. Surveys should avoid the open-ended question and should include multiple-choice questions so that answers are given easily.
- Focus groups: This involves hosting a group of different type of customers to discuss over a product type and to understand the reasons why customers will buy certain brands. This should include open-ended questions and allow participants to try a new brand and write down their views about it.
- Point-of-sale: This requires obtaining statistics from stores or corporate headquarters. Companies should focus upon a particular type of product and determine whether the product is purchased more than often in a certain time period in comparison to other time periods. This paves way for researching the reasons why a particular brand was selected over the other.