Consumer behavior includes how people make purchases, whether as individuals, in groups or organizations, as well as how consumers use those products. There are a few consumer economics examples, but all studies of consumer behavior have to account for multiple factors. These factors include how a product is marketed, how it is featured in stores, the benefits users derive from a product, the layout of a store and the positioning of a product or service against its competitors. These are only a few of the considerations that go into understanding the types of consumers in economics and their behavior.
Because consumer behavior is such a vast topic, there have been multiple studies conducted in an attempt to understand why consumers choose to spend their money the way they do. This has led to the development of consumer theory, which partly explains why people make purchases. There are numerous influences on consumer behavior.
Given how many factors influence consumer purchasing decisions, there is no easy way to completely understand why a consumer chooses to purchase what they purchase.
Consumer behavior in economics falls within the field of microeconomic consumer theory, which is the study of how people decide to spend their money. Consumers have a budget and set of preferences that influence the purchases they make.
Given these restraints, they attempt to make the best purchase possible by assessing the goods and services available to them and making comparisons of what is available. Consumer theory helps marketers better understand these restraints and market products appropriately toward different parts of the population.
There are four major influences on consumers in the field of consumer theory:
- Assessment of the products available
- Judgement of a product's utility
- Comparison of a product against similar products
- Rational decision making
Consumers choose from the options available to them to decide which is best. Part of that assessment includes determining whether a product's utility, or usefulness, is helpful to them. When consumers already have a product that partially fulfills their needs, they will be more critical about buying a product that is similar.
Consumer theory indicates that consumers balance utility, price and whether the consumer’s need is already being partly fulfilled by a similar product or service when deciding on the purchase of a product or service.
While this is a straightforward view of how consumers judge whether to buy a product, consumers don’t always make rational decisions and may make irrational purchases.
Consequently, while marketers have a general idea of how people reach a decision to buy a product, they can't always rely on that understanding to consistently judge whether a consumer will make the purchase. Consumers may be influenced by various factors, such as their environment, and end up making impulse purchases.
While marketers assume that consumers do make rational decisions in many cases, it's also important to remember that customer behavior may be influenced by factors outside a marketer's control.
No matter how a product is advertised, no matter how much it might help the consumer, the customer may make an irrational decision and buy a product based on impulse or simply because a product seems attractive to them.
Although there’s a heavy emphasis on how to market products to individuals and impact their purchasing decisions using advertising, the utility of a product is important to whether a person will buy the product at all. Every day, people make decisions about what they need to do, including what to wear, what they want to eat, and how they get their work done. Consumers make purchases based on the products that best answer these questions.
Understanding utility is essential because products need to be designed and marketed partly based on how they can help the consumer on a day-to-day basis.
Part of understanding consumer behavior and utility includes understanding the way a product compares with alternatives the consumer has, including alternative brands, products and services. Although consumers also compare retailers, when it comes to utility, comparisons occur between the products and services that can fulfill a person’s needs.
Marketers attempt to position what they are selling as the best product or service for fulfilling the consumer’s needs. This can be done by identifying segments of the market and targeting advertising specifically at that segment.
In practice, marketers do this all the time by selling their products based on what that product can do. Household products, such as laundry detergent, can be sold on the basis of its functionality and ability to make clothes cleaner. Other products try to feature their utility but attempt to frame that utility in a hip advertisement. Mobile phones are an example of this because they wrap the phone’s ability to connect people with trendy marketing that includes the use of fun apps and chatting services, both of which enhance the experience of using a phone.
Whereas consumer theory tries to put forth a relatively static theory of how consumers make purchase decisions, marketers and store designers understand that not all purchases are rational. There are all sorts of different influences that can drive a person to make a purchase, including the impact of marketing and store layout.
The aesthetics of a store can influence consumer impulse-buying behavior. Marketing and advertising can drive consumers into a store, but once there, the store’s ambiance itself can affect whether a person makes a purchase.
Researchers noted that store features that highlighted products were most likely to drive impulse buying. So, when featuring merchandise, lighting is important because it highlights the product and makes it more likely a consumer will make a purchase on impulse.
There are also cases where the store layout and design are linked to consumer purchases. Consumers who have self-improvement goals, mainly those looking to better themselves, are more likely to buy products from a well-designed store. Appealing interior design can have a strong positive effect on this segment of the market and influence whether they make a purchase.
The research into consumer behavior suggests that store layout should include appealing aesthetic elements that serve to highlight various products.
One of the most prominent examples of store layout impacting consumer behavior occurs in the grocery store. Grocery stores are designed to take advantage of research into store layout, and store designers put the most expensive products at eye level for the average consumer.
Lower-cost products are placed in harder-to-see areas. Because grocery stores can be confusing to navigate, people tend to pass by the most expensive items several times. This makes it more likely that they will give up on finding specific items and instead purchase the most easily seen – and higher-priced – products.
Another influence on whether consumers purchase a product is the product’s aesthetics. As more products come to market, it is increasingly difficult for customers to distinguish the value of one product from another. When product designers integrate unique visual elements and emphasize those elements in marketing, consumers are more likely to make a purchase.
As a result, it’s vital at the product-design stage and in packaging for a product to be visually distinct from competing products on the market.
Visual design is so powerful that it can make people overlook the price of a product. Marketers may use visual aesthetics to differentiate their products from competing products, but these same aesthetics also make it less likely that a consumer will care about the cost.
The more unique and prestigious the visual aesthetics of the product, the less likely it is that the consumer will think about the product’s price. Mobile phones are among the costliest investments individuals make. Sleek design and trendy product packaging are used to sell consumers on the importance of having a costly phone, even when the features are comparable to those of a less expensive phone model.
The visual aesthetics of a product include both the product’s design and the packaging it is shipped in. A consumer’s first point of contact with many products is its packaging, and packages that do not sufficiently showcase the product may fail to catch a consumer’s attention.
The aesthetics of the packing itself, when trendy and appealing to the modern consumer, makes it more likely that the consumer will pay attention to the product in the first place. Consequently, impacting consumer behavior must include a union of both product and packaging aesthetics.
Historically, the majority of research has been into how store layout, product aesthetics and traditional features play into whether a consumer will purchase a product. However, modern consumers make many of their purchases over the internet. Because of this, research has now extended into whether website layout and design impacts purchasing behavior.
Considering how consumers are affected by store layout, it should be no surprise that website design influences consumer behavior.
Whether a consumer decides to purchase a product over the internet depends partially on whether they trust the purchasing process. Modern fears that online transactions might not be secure can negatively affect whether a person decides to make a purchase.
Part of effectively reaching out to people to make purchases online should include attempts to increase the consumer’s trust in the online process. How a website is designed, including the ease of navigation, overall visual appeal and informative nature, can all impact trust in the site and increase the likelihood of online purchases.
Website design typically follows a specific flow, also known as a conversion funnel, that maximizes the chances a consumer will make a purchase. Organic and paid traffic arrives on a landing page, which should be informative and let the consumer know whether they can find what they are looking for.
The consumer should be guided along to the product or service they want to purchase using an easy-to-navigate layout, then enticed using, when possible, limited-time sales or the offer of new products. Along the way, consumers can also be given a chance to sign up for email marketing, through which marketers can reach out to an already interested audience to maximize the possibility of future sales.
Consumer behavior is a broad topic that encompasses everything from traditional sales within a store to online sales using a digital storefront. The existing research demonstrates the importance of visual aesthetics and navigation to selling products and services. The importance of these features is apparent both online and in brick-and-mortar stores.
There are many types of consumers in economics, but at the end of the day, consumers ask themselves whether a product or service will satisfy their needs. Because the market is more competitive than ever, they have numerous choices of products from which to make their purchasing decisions. Product designers and marketers can influence consumers' behavior by producing products and packaging that distinguish their product from its competition.