CuriousOwl

What is the reason that we buy a particular product? 

Simple answer – Because it is useful for me. 

Ok, agreed.

Then why do we choose Brand X instead of Brand Y or Brand Z? The influence one brand has on us is what drives the sales. 

This influence could be of any form, like – 

My friends are also using it.

Celebrities appear in the ads.

It makes me feel better.

I have ads appearing on TV, in newspapers, and on Facebook.

And many questions like these.

The behaviour of a consumer is driven by many factors. The study of these factors contributes to decision-making. But then, consumer behaviour is very complex to study, even the experts are not able to successfully decipher it. Yet, we try to get as close as possible.

What is consumer behaviour in marketing?

In the early days, there was a notion that companies would manufacture a product that they thought was useful, or profitable. There will be a complete set of people who would try to convince intended end-users to buy them. Sometimes it worked, but many times it wouldn’t.

After all, why would I buy a product which is not fulfilling my criteria and expectations?

So, the traditional method of production to sales process was lacking a scientific approach.

Companies never interviewed people to get their opinion at that point of time.

Later on, when companies realised the importance of a data-driven approach, things started changing.

Moreover, the entire process has become interdisciplinary. Inputs of experts from the fields like Psychology, Anthropology, Sociology, Economics were sought. These ingredients provided a robust insight. 

Analysing a customer’s viewpoint, their inclination, liking, desires etc had taken a center stage. Consequently, this complex mix is collectively known as consumer behaviour, also known as CB, in the marketing arena.

Definition of consumer behaviour

According to the American Marketing Association, CB can be defined as “the dynamic interaction of effect and cognition, behaviour, and environmental events by which human beings conduct the exchange aspects of their lives.”

“Consumer Behaviour is the decision process and physical activity which individuals engage in when evaluating, acquiring, using or disposing of goods and services.”

Louden and Bitta

 The above definitions try to explain CB as how people (individuals or an organisation) take decisions in buying a product or a service. In turn, by what factors that decision-making process was influenced?

Factors effecting consumer behaviour

There are broadly three factors.

Psychological factor

Each individual is unique. How he or she has seen life, innermost feelings, the experiences they have gone through create different attitudes and different opinions. A person owning a Porsche would prefer the Omega or Rolex category of watches. He will never buy a generic brand of the watch as it would be against his image that he/she wants to project.

If I am happy and satisfied with a product or service, my loyalty towards that company will be stronger. A delightful experience plays an important role here.

Personal factor

A young person will have a different attitude than an elderly. Demography (Age, gender, culture) plays an important role here. A college-goer would be more interested in casual clothing, whereas senior managers would look for formal clothing.

The economic condition of an individual, too, acts strongly here. An HNI (High Networth Individual) would not think twice about buying a designer or premium brand but a person falling in the low-income group will be content with a cheaper product.  

Social factor

The influence of friends and family creates different perceptions amongst different people. A person staying in a posh locality will be more conscious of his or her lifestyle. The brand of clothing, swanky car, exotic food or so. On the other hand, People in the countryside will not bother with those things much.

For many of us, mother has been a great influencer. If she is more towards a healthy diet, the son or daughter picks healthy products, too.

When all my friends are investing in Bitcoin, I also get influenced and would be interested in doing so.

Understanding consumer behaviour

There are essentially three types of techniques used to gather the findings.

Survey data

The data was collected through surveys conducted through online forms, via phone or social media inputs. However, the answer to the questions should be properly formed. Just a yes/no type of answer will not give any actionable insight. It is better to have multiple-choice questions so that people can find them easily and be encouraged to fill them at once. 

Point of sale data

This data can be gathered from the physical stores, which will provide real-time insight about a product and will help understand whether or not customers are buying, in what quantity, and what age group is interested more. Overall, a durable data to research on the product further.

Focus groups

A technique for gathering data via group interactions. Very helpful in qualitative research. Companies will get an insight into the product’s strengths and weaknesses. “Why would a customer buy this one and not any other?”, “What makes this product special?”, questions like these will be raised and discussed with the help of an open-ended questionnaire. 

Consumer behaviour models

Black-box model

Often it has happened that we see a lot of ads, promotions of a particular brand. For example, if I am noticing marketing messages to me off a new brand of chips. Although it was not needed, still I would buy at least to check what this hype is all about. 

Similar to this, there can be many triggers that affect a buying decision. Those can be price, availability, or social factors (If everyone is buying, let me try too).

Personal variables

They are internal factors. Internal to a person, so to speak. 

Opinion, beliefs, liking, values, or tradition falls in this category. For some, buying mineral water is a waste of money. For some it is a matter of hygiene, for some a matter of status, perhaps.

Complex model

This model considers both Black-box and Personal variables. It is a complex mix of both the above hence the name.

Types of consumer behaviour

(Source: businessjargons.com)

Complex buying behaviour

This behaviour is exhibited while buying high-ticket items, like cars, houses, etc. A consumer at first tries to talk to his trusted people, friends, family, etc. As we know, every customer has a certain belief on which he bases his decision. 

So, in this sort of buying, a customer attaches himself to a belief first, then he/she develops a certain outlook towards the product and then finally arrives at a buying decision.

An important point to note here is as a seller, the responsibility increases. The seller needs to educate the customer, thus building trust. Similarly, a buyer would learn the pros and cons, the risks involved as the cost involved is going to be higher.

Dissonance-reducing buying behaviour

 Many times, it happens to us we buy a certain product due to time or budget constraints. Later on, feel disappointed about it thinking that other brands of the same item would have been better.

Maybe because of the product itself or after-sale service. Whatever the reason, this feeling needs to be reduced or eliminated. 

Companies need to differentiate themselves from the competition and should take steps, like providing excellent post-sale care. Or, having service camps organised periodically to take the tension off the shoulder.

Habitual

 The items of everyday use are not researched as we do for high-value items. Consumers buy whatever they have been using or what is immediately available. Brand loyalty doesn’t work here. Companies should advertise aggressively and repeatedly to feed the information to the subconscious mind. So, when consumers go to buy the product, the brand recall will be high. Visual messages work even better, so ads on TV, print media are excellent mediums to promote and influence behaviour.

Variety seeking

 As the name suggests, a consumer who seeks variety. Not because other brands are providing something significantly different, but it is just to break the monotonicity. 

Brand switching is of the highest level. I go to buy a bathing bar of brand “X” but next time I might buy brand “Y”, out of curiosity or to have a unique fragrance. In these situations, brands often occupy a large shelf space to offer several options of the same product. 

Importance of consumer behaviour

It is tremendous. When a company wants to market the product, it needs to understand who its end-user is? The way consumers behave to a certain product, price, promotion and placement.

Segmentation

It will never happen that a company, say, Olay develops one body lotion that youngsters, the elderly and infants alike will use. So, categorization is important and accordingly, the targets will be set. The differentiation makes marketing strategy successful.

One can narrow down the intended customers and go all out with targeted messages.

Retention

Can’t be emphasised enough. Retaining a customer is way cheaper than bringing a new one. So, treat the existing customers with the respect that will make them stick to your service or product.

Once a customer is delighted, he/she becomes a brand advocate. A robust promotion with no expense of yours. An excellent customer service department can influence their behaviour. Even if the company deviates from the service, make sure it will be straightened out quickly and in the most satisfying way possible.

Relevancy

By designing an impactful marketing campaign. When I am designing clothes for college-goers. Will it make sense to promote around corporate buildings? Or, it will be much more effective when the promotion is done near some college. Similarly, a trip organiser will have a distinct set of itineraries designed. For the elderly, a more serene atmosphere and an adventurous place for the young. 

Follow the trends

The generation today believes in FOMO (Fear of Missing Out). Similarly, a brand also should believe in FOMO and not miss out on the latest trends which will entice the audience. People are asking about much healthier food products these days. A brand with a traditional approach won’t survive when everyone is offering organic products.

Innovation

Might sound clichéd but innovation is the key. 

People get bored easily. A brand should come up with new products so that product range is increased. Not disturbing the existing range, of course.

Though we have examples of New Coke, which failed miserably. The point is to test the waters before taking the plunge. 

A company shouldn’t shy away from experimenting. If one product won’t click, another will. This way, you are providing a positive signal a brand is trying to bring more value to its customers.

Conclusion

Needless to say, consumers buy a product depending on various factors of consumer behaviour. It indeed is a vast and complex subject. So, when a product or a service is being designed and developed, one extra bit of due diligence needs to be done with respect to CB. 

Although there is no magic pill though, proper analysis and implementation of CB in the marketing strategy would certainly bring a big difference to the bottom line.