Consumer behaviour is one of the essential aspects of any business. You have to understand this aspect of business thoroughly. It will allow you to develop better and relevant products for your customers that will generate better sales and revenue. Moreover, you can even establish your brand as the thought leader in the market with the help of this phenomenon.
In this article, we have covered all the essential aspects of customer behaviour. From definition to influencing factors, you will find everything in detail in this guide. After reading this article, you will understand the importance and need of studying customer behaviour for businesses.
Without any delay, let’s get started !!
What is Consumer Behaviour?
Customer behaviour is referred to as the study of actions and decisions taken by people while acquiring, using, and disposing of products, services, or ideas. It is a step-by-step process to understand the behaviour of consumers while purchasing products. This includes identifying the needs and wants of consumers, gathering the required information, evaluating possible alternatives, making purchase decisions, and conducting the post-purchase evaluation.
Every business should thoroughly understand customer behaviour with data-driven insights. It will help marketers understand consumer choices, craft effective strategies, and develop products or services. I helps them to meet the exact needs and pain points of the customers. To properly understand customer behaviour, you have to take the help of psychology, sociology, and economics.
Definition of Consumer Behaviour
Consumer behaviour is defined as the process of studying the actions taken by individuals, groups, or organizations to select, purchase, use, or dispose of any product, service, or idea. It also includes various internal and external factors that influence consumer decisions.
To define consumer behaviour in simple words, it is basically the process used by any business to understand the behaviour of its consumers. It helps them to improve their products and services. Plus. It is based on the customer’s needs and preferences. This process consists of various factors, including social, psychological, personal, and more.
Theory of Consumer Behaviour
Customer behaviour theory refers to a concept that allows you to know about consumer choices. It includes people’s spending habits, tendencies, and budget restrictions. In simple words, this concept will help you define you about the consumers. It includes how people generally spend their money like to make their income and decide the prices of commodities.
The theory of consumer behaviour is a part of microeconomics. Thus, a renowned economist has defined customer behaviour as theirs. Every person has their own wishes to spend their money on the products that give them happiness. The budget also plays a considerable role in every purchase they make. Therefore, companies have to properly research customer behaviour. It will help them to decide all the factors of their products and services.
Models of Consumer Behaviour
Consumer behaviour models are developed by great economists. It helps the companies to understand the buying pattern of customers. It is also known as a traditional behaviour model. This model is divided into four major parts mentioned as follows:
1. Learning Model
The Learning model of customer behaviour is based on Abraham Maslow’s Hierarchy of Needs. This model allows you to understand that all the customers prioritize their buying behaviour based on their level of needs and requirements. First, have a look at the picture below to understand it better:
This model has a complete hierarchy from bottom to top. It starts with basic needs and reaches self-actualization. In this model, you can understand that consumers first seek to fulfil their basic needs in life. For instance, a customer first would go to complete their need for food, not for any fancy clothes.
In this way, you can understand that there are three different levels of customers in the market. It includes Basic Needs, Psychological Needs, and Self-fulfillment Needs. Therefore, you have to understand the level of your targeted customers and offer them your products or services accordingly. It will help your products or services to make them feel connected. As a result, you will catch their attention and loyalty.
2. Sociological Model
The sociological model of customer behaviour represents the purchases made based upon social groups. Simply put, customers develop their taste in purchases based on several social factors. It includes their family, friends, colleagues, etc. In fact, people who like to live alone have different choices.
For instance, if you are friends with most of the executives, then you would like formal clothing. Thus, you should understand the targeted customers of your business. It allows you to divide them into separate groups. Plus. you will be able to make more precise and personalized offerings. Simply, you must insert the experiences in your products or services and how these groups usually act.
As a practical example, you can target the community of people who like to go to the gym and stay fit. You can offer them certain products different from gyms, such as a school water bottle that keeps the water cool. You can even offer them extra cool gym bags. We hope you would have understood how you can use this consumer behaviour model.
3. Psychoanalytical Model
Psychoanalytical models say that every consumer has a conscious or subconscious motive that makes them purchase. These motives can be hidden fears, complexes, desires, or personal longings. This model was designed by Sigmund Freud, who explained the importance of the right advertisement in order to sell various products.
Customers might not know why some ads appeal to them at the utmost. But you should know it as a marketer. For instance, most people like to look cool in front of the world. Therefore, sunglasses are represented as an excellent accessory in the advertisements. It triggers the customers’ desire and makes them instantly purchase the glasses. This is how you can craft your product’s advertisement attached to the emotions or motives.
4. Economic Model
Among all the traditional models of consumer behaviour, it is one of the most straightforward ones. This model says that consumers spend the resources they have (such as money) to meet their needs and wants. Therefore, you can easily evaluate your targeted customer based on their income level. Customers will go for the products and services based on their regular income.
As it sounds, it is one of the simplest methods to understand customer behaviour. However, there are always certain expectations in every case. For instance, your customers might belong to a middle-class or lower-class condition, but they can spend any amount of money when it comes to treating health conditions in the hospital.
Therefore, before applying any model, you have to understand your products and their needs in the market. It will give all of your answers.
Consumer Behaviour In Marketing
Customer behaviour plays an important role in the marketing area of a company. It allows you to understand the preferences of the customers for purchasing any product. Therefore, your marketer can craft more effective strategies to target the right customers with the right messages at the right time.
Here, we’ve mentioned some of the marketing factors that customer behaviour impacts.
- Product design: Consumer behaviour marketing plays a significant role in developing an ideal product. It will help your products to customer’s needs and preferences. Hence, it will directly boost your company’s sales and increase revenue.
- Market segmentation: Marketers can also segment the market based on customer behaviour. Simply, it will help your marketing team to better your brand messages and craft more impactful strategies. Plus, every step would be based on different demographics.
- Branding: Customer behaviour can be used to develop new brand strategies. It allows you to match your brand’s overall image and messages with your customer’s taste of choice. Thus, it can also help you develop the consumer’s loyalty towards your brand.
- Pricing: It can also help your brand marketers to decide the correct pricing for the products. You can determine the pricing based on the purchasing power of your customers. Plus, you can even select the pricing that varies on different market segments.
Factors Affecting Consumer Behaviour
Here are three main factors that influence the customer behaviour in the market:
1. Psychological Factors
Psychological factors widely affect consumer buying behaviour. It consists of the wants, needs, mindsets, and perceptions of the customers. In simple words, people often find certain products to be of the highest quality, such as Apple and OnePlus, in the mobile industry. It makes them prefer these products in the market instead of any other due to their high-end features and brand image. Therefore, it is the basic psychology of an individual or group towards all the products or services in the market. If you’re a good businessman, you have to play with this psychology to position your product in the market.
2. Personal Factors
As the name sounds, personal factors include the individual’s choices, preferences, and non-preferences. Moreover, it also consists of the age, gender, culture, and habits of the customers. All these demographics combine and create a separate customer profile. Here, your product has to solve the common problem of all the people of the same demographics. Thus, you will be able to make better sales for your products.
3. Social Factors
Social factors include income level, dwelling, family dynamics, and general expenses. It will help you to differentiate a particular group of people to develop your targeted audience. If your customers have a high income and live in a high-level society, they won’t hesitate to purchase expensive products. Therefore, you can set your products for higher prices as well.
Importance of Consumer Behaviour
Businesses invest a significant amount of money and resources into their products and services. At this point, the products and services must be based on the customer’s needs and preferences.
Here, customer behaviour helps companies to reach their targets with ten required features. We have mentioned some of the genuine importance of customer behaviour below:
- Improve marketing and communication: In this dynamic world, the choices of customers are always changing. Thus, studying customer behaviour allows you to understand the recent market demands and preferences. It helps you prepare better marketing and communication programs.
- Promote customer loyalty: When you properly understand the consumer’s needs and preferences, they become loyal to your company. Because they know that you develop your products solely based on their needs and requirements.
- Retain customers: Nowadays, consumers are more brilliant than before. They totally understand which company is creating products relevant to their needs and preferences. Hence, they give their loyalty to the companies that thoroughly understand their needs and pain points.
- Predict market trends: There are various companies that genuinely understand customer behaviour based on current needs and preferences. It allows you to predict the market trends accurately. In this way, you can better your future products and services.
- Increase your product relevancy: Studying customer behaviour allows you to know all the essentials about the customers. Therefore, it allows you to create products and services that are more relevant to your targeted audience. It helps you make more sales and generate revenue.
Wrap Up
Businesses can achieve any heights of success if they understand their customers. Consumer behaviour allows you to understand the buying patterns and preferences of the customers. Therefore, you can develop your product and services in this way to increase sales. We hope this guide helps you better understand the concept of customer behaviour.