What is Consumer Behavior?

Consumer behavior is how consumers decide what, when, and how to buy a product or service. It uses ideas and concepts from different streams such as economics, psychology, and sociology to demonstrate how a consumer’s attitudes, emotions, and choices can affect their buying patterns.

Consumer behavior is a relatively new discipline that emerged in the 1940s and 50s as a part of the marketing area. Consumer behavior is not easy to forecast as there are several variables in play that can affect a buyer’s decision. However, several new research methods such as machine learning, consumer neuroscience, and ethnographic studies have been developed to help marketers better understand their customers.

Characteristics of consumer behavior

Consumer behavior characteristics are the qualities of a customer that influence their response to a purchase cue or stimulus. This response, in turn, determines the consumer’s decision to buy or not to buy. The following are six key characteristics of consumer behavior that marketers should be aware of:

1. It involves more than buying – it also involves using and disposing of. All these actions can influence future buyer behavior.
2. It can be applied to products, services, activities, or ideas.
3. It involves interactions between multiple people.
4. It is a dynamic process because the motivations, desires, and other purchase triggers of a consumer can change over time.
5. It involves exchanges between people – we all provide value in return for something of equal or more value.
6. It involves many decisions in the entire purchase process.

The above characteristics can be summarized into the main determinants of consumer behavior:

1. Psychological factors: These can include motivation, perception, attitudes, and beliefs
2. Social factors: These include reference groups, family and friends, social status, and role in society
3. Cultural factors: These include values, subcultures, and the social class of the customer
4. Personal factors: These are factors such as age, income, occupation, and lifestyle
5. Economic factors: Such as current and potential income, credit worthiness, liquid assets available, and savings

In this article, we will focus on how social media amplify social factors to influence and determine a consumer’s purchase decision. This decision may or may not be a rational decision. It is usually an emotional decision.

Social media

What, exactly, is social media? Wikipedia defines social media as “A group of interactive digital channels that facilitate the creation and sharing of information, ideas, interests, and other forms of expression through virtual communities and networks.”

In short, social media are apps and websites that allow users to create and share content or participate in networking. Examples of social media are Facebook, Instagram, Twitter, and region-specific apps such as Weibo (China) or Koo (India).

Social media’s influence on consumer behavior

Social media is now all about commerce – not just conversations. As we saw above, social factors are a strong determinant of consumer behavior, and the growth of social media and smartphones has given a huge boost to these social factors, or “word of mouth” influences.

The pandemic gave a huge boost to online commerce, and social channels contributed massively to this trend, as we can see from the graph below for the US market:

Image source: https://influencermarketinghub.com/social-commerce-stats/

Social media feeds are the new channels – consumers now do not need to go into stores for information on products or services. Information, feedback, or reviews are now just a post away, and consumers can call friends, family, or even perfect strangers to help them decide what, when, where, and how to buy.

It has been estimated that nearly 70% of consumers use social media today. The graphic below shows just how much social media channels influence consumer behavior:

Image source: https://study-aids.co.uk/dissertation-blog/consumer-purchasing-behaviour-social-media/

Let us look at some more statistics to understand this trend better:

1. Consumers are 71% more likely to make a purchase decision based on social media references
2. Millennials are more likely to use digital channels to learn about new products
3. 81% of consumers’ purchasing decisions are the results of their friends’ social media posts
4. Conversions increase by one-third if mobile shoppers see positive product reviews before deciding to buy

Let us now see the important ways in which social media can influence and impact consumer behavior.

1. Reviews on social media heavily influence the consumer purchase decision.
   1. “Social proof” – the validation of a decision by copying it – is an increasingly important factor in purchase decisions
   2. More than half of customers today check product or service reviews on social media before making a decision

2. Consumers buy directly from social channels.
   1. Consumers are increasingly buying online, especially from social channels.
   2. The size of the global social commerce market was approximately USD 584.91 billion in 2021 and is expected to touch USD 727.63 billion in 2022

3. Consumers use social media to engage with brands.
   1. Customers now prefer to use social channels to get customer service or leave feedback.
   2. The older methods such as email, telephones, or personal visits are no more in use.

4. Two-way engagement with brands is mandatory now.
   1. Social media has added a new dimension to the engagement between a brand and its consumers.
   2. It is no longer top-down (i.e., from the brand to the consumer) but a more interactive process with consumers using social channels to engage with their preferred brands.

Influence Of Social Class On Consumer Behavior

An important aspect of the social character of consumer behavior is the influence of the consumer’s social class on their purchase decisions. Every social class has people of similar values, behavior, and lifestyles. Marketers need to pay attention to this factor because “social perception” significantly influences an individual’s purchase behavior. These influences are seen at different levels in an individual’s interaction with others in their social class:

1. Initiator: the individual who comes up with the suggestion of the product or service
2. Influencer: can be a family member, friend, or even a stranger who drives the purchase
3. Decision maker: the individual who makes the final decision after evaluating the product or service being considered
4. Buyer: the end-user or the final consumer who will use the product

Conclusion

Social media has made the interaction between a brand and its customers a two-way process. Both brands and customers can learn more about each other through social media. Brands can use social listening to get a granular view of what individual customers are looking for and can tailor their marketing messages accordingly. This helps the brand address the consumers’ pain points faster and more effectively.

Consumers’ expectations from the brands they like have become much more amplified thanks to social media. Brands must use the right tools and methods to respond to this challenge.