What is Consumer Behavior and why is it important for business success?
Remember the last time you bought something for yourself? A book maybe?
Why do you think you bought it? of course apart from the fact that you wanted to read. Why that particular book?
A simple answer would be because you wanted or needed it.
People do things to satisfy their needs and wants. The same reason applies when they buy a product or service.
“Think like them”, “Put yourself in their shoes”. As business owners, you probably heard this before. Well, this is where consumer behavior comes in handy.
So, what is consumer behavior?
Understanding the psychology behind people choosing to use, and discard products and services, including consumers’ emotional, mental, and behavioral responses is known as consumer behavior.
Consumer behavior includes psychological, biological, chemical, and even economic notions. It helps us understand what affects consumers’ buying decisions.
Why is consumer behavior important?
People make a lot of buying decisions throughout the day, without giving them much thought. Cognitive Biases and Psychology triggers come from the unconscious parts of our mind. Cognitive bias is a deviation from the norm but in a systematic pattern. These affect our decision-making process.
As insignificant as these decisions might seem, they keep marketers on their toes. Because decoding the operations behind customers’ decisions means that we can use that information to grow revenue.
“Know them like your spouse. No, better.” Joanna Weibe, Copyhackers
Here are a few reasons why understanding consumer behavior is a top priority for marketing success-
Understanding your consumers’ needs and desires not only helps you figure out the products that are needed in the market and the ones that are outdated but also helps you offer your product in a manner that generates an optimum impact on the consumers.
It also helps distinguish a consumer from several other consumers. This helps in deciding the target group of consumers. Understanding different targeted consumer segments can help you structure marketing campaigns for each of them. Catering the right content to different consumer segments that fit your business will result in better ROI on your marketing initiatives.
Remember, it isn’t always about converting new audiences into consumers but also about retaining them. This can only be optimized by giving attention to their specific buying decisions.
Another important reason is to gauge the competition. “Are people opting for other competitor brands?”, “what are they offering?”, “what are the shortcomings in your product or services?”. Based on your consumers’ expectations you can gain a competitive edge.
Understanding consumer behavior also helps in innovating products that won’t fail. When the world is changing as fast as it is, it’s important to keep innovating to stay relevant. Remember how Nokia lost its place as the best and biggest mobile phones brand in the world when the industry changed to smartphones? Innovation is the only thing that can keep your brand from sinking.
Consumers love a brand that provides them comfort, and comfort comes from understanding. The more you understand your consumer the better customer service is provided. And more customer satisfaction is achieved. Thus, making them loyal to your brand.
“Most new products and ideas end up in failure. There is an estimate of new product failures – they range from 33% to 90% based on the kind of industry.”
Understanding consumer behavior is understanding your customer base “why”
Every consumer has a different thought process and perspective towards buying a certain product. At the end of the day, in order to create effective marketing that really works, which means, generating long-term growth you need to understand your customers’ “why” - why they buy, why they should care about your content/ads/products. There are two factors that determine the characteristics of consumer behavior:
Demographics - Their age group, gender, relationship status, ethnicity, etc.
Psychographics- What they think about, the news they consume, their pain points, relation to their peer group, their personality traits, and so on.
Due to the changing fashion, technology, trends, lifestyle, disposable earnings, and similar other factors, consumer behavior changes. Business owners need to align their strategies with these changes to optimize their revenue growth.
Top brands like Colgate and H&M have continually focused their campaigns according to consumer behavior. H&M aims to be environmentally sustainable as they see a growing concern amongst their consumers about being climate positive.
Consumer behavior analysis is an indispensable tool for companies. Understanding consumer psychology allows you to peek inside your consumers’ minds. Using this, you can not only provide them with the best possible solution but one they can not refuse.
The impact of human psychology and sociology on sales success and business growth has been growing more and more as the fight for consumers attention is rising. In the digital age we live in, when competition is so fierce, understanding your customers “why” is what can make or break your business success. That’s why an in-depth understanding of consumer behavior is so important.