The Book on Marketing: Consumer Behavior.

Consumer Behavior: How People Make Buying Decisions.

Throughout the day, how many decisions do you make? What do I put on today? What scent should I wear? What will I be eating for lunch? Consider how frequently we make purchases each day without giving them any attention. 

Even though they may seem trivial, these choices keep marketers up at night. Since we can use such information to increase income by deciphering the thought processes that underlie customer decisions.

What is the meaning of consumer behavior?

The study of consumers and the methods they employ to select, use (consume), and discard goods and services, as well as the emotional, mental, and behavioral responses of consumers, is known as consumer behavior. For firms to develop powerful marketing tactics that can affect consumers' decision-making processes, understanding consumer behavior is essential.

Ideas from psychology, biology, chemistry, and economics are all incorporated into consumer behavior. 

Businesses can target certain demographics, increase brand loyalty, and spot new trends by customizing their marketing strategies to take into account customer behavior. Businesses can use this information to stay one step ahead of the competition and adjust to shifting customer trends. Each effective marketing strategy requires a thorough understanding of consumer behavior. Businesses may create efficient marketing strategies that satisfy the demands of their target market by researching the factors that affect consumer behavior.

Why is consumer behavior important?

Understanding consumer behavior is crucial for marketers because it enables them to better communicate with customers. They can close the market gap and pinpoint the items that are required and the products that are no longer in use by knowing how consumers choose a product. 

Marketing professionals can display their goods in a way that has the greatest influence on consumers by researching consumer behavior. Understanding consumer purchasing behavior is the key to connecting with, involving, and convincing potential customers to make a purchase from you.

A consumer behavior analysis should reveal:

• Consumer perceptions and feelings about other alternatives (brands, products, etc).

• What causes people to select particular options.

• Purchasing and research habits of consumers.

• How the environment (friends, family, media, etc.) affects how customers act.

Many factors frequently affect consumer behavior. Marketers should research consumer buying trends and purchase behaviors. Most of the time, businesses only have control over certain factors that affect consumer behavior. For example, consider how IKEA always appears to urge you to spend more money than you had planned to. 

What, then, are the motivating elements for customers to consent? There are three types of variables that affect how consumers behave:

1. Personal factors: demography can have an impact on a person's interests and attitudes (age, gender, culture, etc.). 

2. Psychological aspects: a person's views and attitudes will influence how they react to a marketing message. 

3. Social factors: family, friends, money, level of education, and social media usage all have an impact on how customers behave.

Four Types of consumer behavior

1. Complex buying behavior. This kind of behavior happens when customers purchase a pricey and in-demand good. Before making high value-added expenditures, they are actively involved in the purchasing process and consumer research. Think about purchasing a home or a vehicle; these are examples of sophisticated purchasing behavior.

2. Dissonance-reducing buying behavior. Although being heavily involved in the purchasing process, the consumer finds it challenging to distinguish different brands. Dissonance can happen when a customer fears they will regret their decision. Consider purchasing a lawnmower. Choosing one will be dependent on cost and convenience, but once you've made the purchase, you'll want to make sure you picked the appropriate one.

3. Habitual buying behavior. Consumers who make habitual purchases show relatively little interest in the product or brand category. Consider going grocery shopping: you visit the store and purchase the bread of your choice. You don't have a strong brand loyalty; you just act in a repetitive pattern.

4. Variety-seeking behavior. In this instance, a customer buys a different product because of desire for variety rather than dissatisfaction with the prior one. like when you experiment with different scents of shower gel. You'll have a better understanding of how to segment consumer types if you are aware of the types of customers your online store draws.

What affects consumer behavior?

There are many factors that can influence consumer behavior, but the ones that do so most frequently are:

1. Marketing campaigns. Purchase decisions are significantly influenced by marketing initiatives. They can even encourage customers to switch brands or choose more expensive alternatives if done well, consistently, and with the right marketing message. Marketing efforts, like Facebook advertisements for eCommerce, can also be used as reminders for buying products or services that are often needed but may not always be front of mind for customers (like insurance for example).  Impulse purchases might be influenced by a persuasive marketing message.

2. Economic conditions. Economic factors play a significant role, particularly for expensive goods (like houses or cars). Regardless of their financial obligations, customers are known to become more self-assured and prepared to indulge in purchases in a healthy economic environment. With more expensive purchases, the decision-making process takes longer and is subject to more subjective influences.

3. Personal preferences. Personal characteristics, like as preferences, values, morals, and priorities, can also have an impact on how consumers behave. Personal views are extremely potent in sectors like fashion or food. Advertisements can undoubtedly affect behavior, but ultimately, consumer preferences have a big impact on their decisions. No matter how many advertisements for burger joints you see, if you're a vegan, you won't start eating meat as a result.

4. Group influence. Consumer behavior is also influenced by peer pressure. Our decisions may be greatly influenced by what our friends, neighbors, close friends, coworkers, and family members believe or do. Consumer behavior is impacted by social psychology. For instance, choosing fast food over prepared meals is one such instance. Social and educational aspects can influence one another.

5. Purchasing power. Not to mention, our ability to buy things has a big impact on how we behave. You will think about your budget before making a purchase decision unless you are a billionaire. Even if the product is top-notch and the marketing is spot-on, you won't buy it if you can't afford it. Marketers will be able to identify eligible consumers and provide better outcomes by segmenting consumers based on their purchasing power.

Customer behavior patterns.

Patterns of purchasing are distinct from buying habits. Patterns display a predictable mental architecture, whereas habits evolve over time as tendencies toward an activity and become spontaneous. Each customer has his distinct buying habits, but buying behavior patterns are collective and offer marketers a unique characterization. 

Customers' tendencies can be categorized into:

1. Place of purchase. Even when all items are offered in the same store, customers frequently split their purchases over multiple. Consider your preferred hypermarket: while you can find apparel and footwear there as well, you are likely purchasing those items from real clothing manufacturers. Customers aren't always loyal to one store, unless it's the only one they can reach, when they have the opportunity and access to buy the same things at multiple places. Marketers will be able to pinpoint important store sites by researching customer behavior in terms of location preference.

2. Items purchased. Marketing professionals can learn a lot about their target audience's purchasing habits by looking at a customer's shopping cart. Bulk purchases of necessities are possible, although smaller, less regular purchases of luxury products are more typical. The perishability of each item, the buyer's purchasing power, the unit of sale, the price, the number of customers for whom the item is meant, etc., all have an impact on how much of each item is purchased.

3. Time and frequency of purchase. Consumers will shop based on their ability to pay and will anticipate service even at the most inconvenient times, particularly in the era of e-commerce where everything is just a few clicks away. By analyzing a buying pattern and tailoring its services to the timing and frequency of transactions, the store must satisfy these objectives. One thing to keep in mind is that geographical variances and seasonal fluctuations must also be taken into consideration.

4. Method of purchase. Either a consumer can place an order online and pay with a credit card or when the item is delivered, or they can stroll into a store and make an immediate purchase. Also, the mode of buying could encourage a buyer to spend more money (for online shopping, you might also be charged a shipping fee for example). 

The method a consumer uses to buy anything reveals a lot about the kind of customer he is. You can find innovative approaches to encourage clients to make repeat purchases, more frequent purchases, and purchases of higher value by learning about their purchasing behaviors.

Customer behavior segmentation.

Identifying different buyer types and customer segmentation have always been crucial. Effective segmentation is even more crucial now because personalization and customer experience are variables in a company's success. Finding a segmentation method that clarifies things and works for your company is crucial because only 33% of businesses that employ customer segmentation claim that it has a major influence on their operations. 

Traditionally, the six main methods of behavioral segmentation are used by most marketers.

1. Benefits sought.While purchasing toothpaste, a consumer may do it for one of four reasons: whitening, sensitive teeth, flavor, or pricing. Customers' actions when researching a product or service might provide important information about the features, benefits, uses, and challenges that most motivate them to make a buy. 

When a customer values one or more benefits much more than the others, those are the main motivational reasons that influence their choice to make a buy.

2. Occasion or timing-based. Both general and specific occasions are mentioned in behavior segments based on occasion and timing.

• Most clients or target audiences fall under the category of universal events. For instance, consumers are more likely to buy specific purchases around holidays and seasonal events. 

• Recurring-personal events are buying patterns for a certain client that repeatedly occur over time. For instance, holidays, birthdays, anniversaries, monthly expenditures, or even daily rituals like stopping for a cup of coffee every morning on the way to work. 

• Rare-personal occurrences are likewise connected to specific clients, but they are more erratic and unplanned, making them harder to anticipate. For instance, going to a friend's wedding.

3. Usage rate. Another popular method of behavior-based customer segmentation is based on the frequency with which a client interacts or makes purchases from a given product or service. Use patterns can serve as a powerful predictor of lifetime value and, consequently, loyalty or churn.

4. Brand loyalty status. The most precious assets for a company are its loyal consumers. They can become brand evangelists, have the highest lifetime value, and are less expensive to maintain. 

Customers can be divided into groups according to how loyal they are by studying behavioral data, which enables marketers to comprehend their wants and ensure that they are met. To foster and enhance the customer relationship and encourage future business, loyal clients should be given special treatment and privileges, such as access to special rewards programs.

5. User status. Depending on your company, there are a wide range of possible user statuses. Many instances are:

• Non-users.

• Prospects.

• First-time buyers.

• Regular users.

• Defectors (ex-customers who have switched to a competitor).

6. Customer journey stage. Marketers may synchronize messaging and personalize experiences to enhance conversion at every stage by segmenting the audience based on buyer readiness. 

Additionally, it enables them to find the stages at which customers are stagnating so they can pinpoint the biggest challenges and growth possibilities, even for post-purchase habits. The RFM model is another method of segmentation in addition to these conventional approaches. Because it enables businesses to build customer experiences around the data they have on each customer category, this strategy is well-liked among eCommerce marketers. 

Recency, Frequency, and Monetary Value are the three letters that make up the behavioral segmentation model known as RFM.

Here’s what these variables show you:

• Recency = how recently a customer placed the last order on your website.

• Frequency = how many times a customer purchased something from your website in the analyzed period of time.

• Monetary Value = how much each customer has spent on your website since the first order.

There are two approaches to carry out the RFM model analysis: 

• Manually - exporting your database to a spreadsheet and conducting RFM analysis on your consumers.

• Automatically - by using certain technologies that build RFM dashboards.

RFM segmentation and analysis will help you identify your most profitable and devoted consumers as well as: 

• Identify the brands and items that are hurting your business.

• Create individualized recommendations for your clients.

• Fix certain issues with customer experience.

If you want to keep your clients and audience loyal no matter how aggressive your competitors are, observe their behavior, listen to them, and develop a relationship with them before making judgments based just on intuition.