Why Consumer Behavior is Important for Business Managers?
Consumer behavior is the study of how people respond to products and services, followed by their marketing and selling. It’s of huge importance to managers because the focus on consumers is the key contributor to the marketing of business practice. Business functions like accounting, production, or finance, don’t need to factor in the customer. Business managers, who truly understand their consumers, can come up with better products and services and promote them more effectively.
Understanding consumer behavior is important for all companies, especially before the launch of a product or service. If the company fails to read the customer’s mind, it may end up in losses. Consumer behavior is usually very complex because each one has a different attitude towards purchase, consumption and disposal of a product. Understanding the concepts of consumer behavior helps in marketing products and services successfully. Besides, frequent study of consumer behavior helps in several aspects. There’s constant change in living standards, technology, fashion and trends, and customer attitude towards a product or service also changes. Marketing of a product is largely dependent on these factors and consumer behavior serves as a tool for marketers to meet their sales objectives.
What is Consumer Behavior?
Buyer or consumer behavior is the attitude displayed by a person while buying, consuming and disposing a product or service. Customer behavior could be affected by several factors. It also involves searching for a product, evaluation on various parameters, and finally consumption. The post-purchase behavior of the consumer is studied later, which reveals customer satisfaction or dissatisfaction.
Consumers, while buying a product or service, go through various steps. Studying consumer behavior helps companies to understand how the decision to buy was made and how they hunted for the product. These information help companies and business managers to know the reasons behind the purchase or rejection of a product or service by the customer.
To understand customer behaviour, marketing experts usually examine the buying decision processes, particularly factors that trigger customers to purchase a product. A recent study disclosed that an average shopper takes less than 20 minutes for purchasing groceries and covers only 23% of the store area, giving managers very little time for influencing customers. In fact, more than 58% of all purchases in a supermarket are unplanned. Business managers spend a lot of money and time to discover what compels customers to take such on-spot decisions. Researchers can obtain the most valuable data on customer buying trends through in-store surveys, and often introduce new products and services in some select stores where they expect to reasonably test an item’s success. In this way, a company can determine whether there’s a chance of the product to be successful when launched, before further investing into it.
Understanding Consumer Needs
Customers adjust their purchasing behaviour depending upon individual needs. On some levels, customer choices could be quite random. Every decision to buy, has meaning behind it, even though it may not always seem rational. Purchasing decisions could stem from social situations, personal emotions, values, and above all, goals.
People buy for satisfying various sorts of needs that may not be solely utilitarian. These needs could be biological or physical, for security, love and affection, to get esteem and prestige, for self-fulfilment, and a hundred other reasons. For instance, connecting products with a sense of belonging has seen success for many hugely popular campaigns like “Fly the friendly skies”, “Reach out and touch someone”, and “Gentlemen prefer Hanes”. Such a focus may link products and services either to attainment of belonging or link them with persons similar to those with whom others like to relate.
Prestige is yet another intangible need. People concerned about their status are ready to pay for that. Products and services appealing to such a need are considered high profile. Targeting this segment of the market means that the demand trajectory of luxury items is usually reverse of the standard i.e. a high-status product sells better at a higher price.
Some equate needs with a particular class of products. For instance, a desire to achieve something may drive people to carry out difficult tasks and invest in tools and self-improvement programs, and similar things.
Personality traits are also imperative for establishing how customers meet their needs. Pragmatic people would purchase what is useful and practical. Their purchases are mostly guided by durability and practicality of a product, rather than physical beauty. An aesthetically inclined customer will be drawn to items that forge a symmetry, beauty, and harmony. An intellectual will be more inclined to obtain more knowledge about a product or service and likely to be critical. They are likely to contrast and compare similar products, ahead of taking any decision. The politically motivated people would seek products and services to give them an “edge” regarding social power and position. More social people can be motivated if the company appeals to the humane angle and promotion that suggests kindness and empathy.
Customers also vary according to the demands they want to meet while buying a product or service. Are they more bothered to meet their own demands and buy what they require for themselves? Or do they give importance to others’ opinions for determining the products and services for their use? It helps the company to understand whether they will purchase a product simply because it’s new and the most popular product available, or because it’s truly something they need.
Customer behavior influences the way business managers brand their products. A wine seller, for instance, trying to cater to customers looking to whet their personal taste, would emphasize the superior vintage quality and fine bouquet. The same seller, marketing the same wine to people who want to satisfy others, would stress on how sharing the liqueur can lift up spirits in a gathering.
Social and cultural values play a major role to determine which product or service would be successful in the target market. If value is attached on a product’s characteristics like hard work, materialism, and activities, then the manufacturing company would suggest these values because they are likely to be more successful. Equally important are social values. If the company suggests that its products would make a buyer more competitive or romantic in places where these values are held in high regard, chances of customers responding will be more.
Learn Consumer Buying Pattern
While all these information may be of help to marketers, it’s equally imperative to recognize what compels a buyer to make a purchase, rather than just generating an interest. Some customers, for instance, only consider the price of the product and no other factors. Knowing the various elements that triggers a purchase activity helps business managers adopt appropriate sales techniques.
Chairperson of the marketing studies department at the Miller College of Business, Ball State University, Susan Powell Mantel, in a study on “attitude-based processing” and “attribute-based processing”, concluded that product attributes like size, price, durability, nutritional value etc. are usually compared disproportionately. Any one of the attributes assumes a key subject of comparison and elicits more consideration from the consumers when they decide on the “best” part of the brand. The order of the consideration is also important here.
Further complicating issues is the fact that buying decisions may not always depend on an “attribute by attribute” comparison. Customers often take decisions depending upon a general evaluation of their intuition, impressions, and knowledge gained from past experience. A learned attitude can also influence decisions. It’s seen that parents who loved Kool-Aid when they were children, usually buy the drink for their kids as well, largely because they have fond memories associated with it, or simply because of brand loyalty.
Each marketing strategy calls for time and effort. Attribute-based processing, however, requires much more effort on part of the consumer.
Mantel’s study discussed other factors that influence buying patterns like the need for cognition and personality differences. The former reflects what extent a person may engage in and enjoy thinking. An individual with high cognitive needs usually evaluates a product more and takes an optimal purchase decision while inside the store. This is partly because they don’t react to advertisements and in-store promotion unless there’s a significant reduction in the price. On the other hand, low-need cognition customers react easily if a product is promoted notwithstanding the discount offered.
Buyer patterns are also dependent upon perceived roles that are acquired via social processes. The roles create a person’s need for things to enable them to carry out these roles, improve performance, facilitate attainment, or symbolizes a relationship.
In many cases, consumers take very little effort for evaluating the products. “Habitual evaluation” refers to a situation where consumers ignore branding and promotion of products and services in a store, maybe because of loyalty towards the brand, shortage of time, or other reasons.
Evaluating all the marketing information could be time-consuming if it’s done every time an individual visits a shop.
Interpreting Consumer Behaviour
It will be a mistake to depend upon traditional wisdom when business managers start to evaluate consumer behaviour, particularly when the actual activity can be studied. Where are they while buying certain items? What’s the time of use? Who accompanies them while purchasing an item? Why do they prefer a particular time to buy their stuff and not others? Business managers must determine the key needs satisfied by that service so as to sell it off.
There are two major ways for evaluating the motivation behind customer purchases: by intensity (how much they want), and by direction (what they want). Direction means what customers want from a product or service. For instance, if the customer is buying a pain reliever he/she may buy one that’s cheaper. But if what they want is a quick reliever, they may probably pay more that serves the purpose. Marketers have to understand the main motivation behind all types of product or service and zero in on the target group.
Intensity, the other way of evaluating customer behaviour, refers to whether the buyer’s interest in a product or service is enough compelling to make them go out and purchase it. Effective marketing can generate such intensity. The “Aren’t you hungry?” campaign by Burger King that aired on TV was compelling enough for people to venture out late at night and buy burgers. Understanding customer motivation is the ideal way for learning how to enhance buyer incentive.
While it’s easy to speculate all these elements, it’s much harder to research the motivating factors for a given product. It’s rare that customers’ reasons to but some product or service marketing campaign could be perfectly determined via direct questions. Researchers have to set up other ways to dig out the information. Questions like “What’s your opinion about your friends reacting to the marketing campaign?” Consumers are unlikely to admit the effects of marketing efforts on them. But they are often ready to speculate the effects on other persons. And they mostly answer their own responses.
Remember, marketing strategies can significantly impact the daily lives of consumers. They act as a source of information for new products and services that are introduced in the market. The strategies also influence the way people perceive things, their thoughts, attitude, beliefs, and finally their buying decision.
There are several ways by which a customer is exposed to various promotional and marketing tactics every day. TV alone accounts for more than six hours of commercials each week. Besides TV, customers can get information from other mass media like, newspapers, magazines, radio etc. What method the company adopts will depend upon the marketing strategy.
Consumer behaviour concepts and theories have the most important to marketers and salespersons. Products and services are devised to cater to the demands and needs of customers. Hence, they must be carefully marketed to successfully achieve the organization’s goals. Studying consumer behaviour helps companies to analyze the various factors that influence the buying decision of customers. Business managers who fail to understand the factors, won’t meet their targets. It’s imperative that companies evaluate consumer behaviour to a reasonable extent or the maximum possible. In the days when companies are cutting corners, unfruitful investments can severely dent revenues.
This is a guide to Why Consumer Behavior is Important for Business Managers?. Here we discuss a brief overview along with understanding Consumer needs and Buying Pattern. You may also look at the following articles to learn more –
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