The consumer market is highly saturated, and most businesses are faced with several competitors who do exactly what they do. How can your business get ahead and stand out so your target market takes notice? Studying consumer behavior can help you to understand what drives your customers to make a purchase. This information is critical for refining every area of your business, from the product to the marketing to the service.
Importance of Consumer Behavior for Your Business
The study of consumer behavior involves understanding the relationship between consumers and businesses, and how consumers decide to make certain purchases and not others. Consumer behavior includes:
- Reviewing psychological, motivational and behavioral reasons for making purchases
- External and internal influences consumers face when making a purchase
- What the sentiment is for specific brands or industries
- How businesses can adapt their campaigns to better appeal to consumers
It’s important for businesses to study consumer behavior because they can learn more about their target audience. With this information, businesses have the ability to analyze their current trajectory and see how they can more effectively cater to their consumers. This helps them to drive more sales, increase their revenue and improve their profitability.
Learn the Factors Affecting Consumer Behavior
There are many factors that affect the way consumers behave. As a result, consumer behavior is not logical or linear. This is why it’s often difficult for businesses to predict consumer behavior. Knowing these factors, however, can help businesses to make educated guesses as to how their consumers may receive their products.
Consumer behavior factors include:
- Economic factors: Elements such as the price of a product, the income of the consumer and the comparison to competitive products can affect the way consumers behave. For example, if your product costs $500 and you compare it to competitive products that cost $600, consumers may see your product as more favorable than if you compared it to products that cost $300.
- Social factors: Personal values, culture, societal values, social class, educational class and lifestyle may also affect how your consumers review your products. For example, in some cultures, the use of sex in advertising is frowned up because it’s not seen as something that should be discussed out in the open.
- Anthropological factors: One's history, geographic location and climate can also affect the way they behave toward brands. In a country that has a rich history of farming, for example, companies that are known to drive farmers out of business may not be seen favorably.
- Psychological factors: A consumer’s understanding of your business, your brand and your marketing campaign will affect how they behave towards your business. Your campaign slogan may seem offensive to some while completely benign to others, for example.
- Personal need factors: If a consumer feels they don’t need or want your product, they will not buy it, even if they have the money and societal support to do so. Businesses can’t change a consumer’s mind about whether or not they should buy something. However, they can work toward showing them why they need such a product in their lives.
Understanding the motivations for consumer behavior can help businesses to influence consumers in certain ways. For example, if your target market is greatly affected by economic factors and generally feels that the price of your product is too high, then your business needs to educate consumers on the value of your product. Instead of dropping your price, you can create campaigns that illustrate how much return on investment your customers get from purchasing your product.
Mitigate Risk for Your Business
One of the major reasons for studying consumer behavior is to reduce the amount of risk for your business. For any business, the customers are the most important aspect. Without customers, you don’t have any sales. And without sales, you don’t have a successful business. When businesses take the time to study consumer behavior, they can get a better understanding of why consumers behave the way they do.
Consumer behavior can help businesses to better plan their products and services. If a business is considering releasing a new product, it's best to test consumer sentiment and attitudes towards the product by releasing it out in a small market. This can save the business a considerable amount of money because they don’t have to manufacture large amounts of the product only to find out consumers don’t like something about it.
With their consumer insight in hand, the business can make the necessary adjustments to their product and their marketing materials before they release the product to the larger market. By understanding consumer behavior, the company can mitigate economic losses and save their reputation.
Create an Effective Marketing Strategy
One of the key benefits of studying consumer behavior is that it helps businesses to build a successful marketing strategy. Through this research, businesses can gain a deeper understanding of who they are catering to. By knowing their audience, they will better understand what their audience needs, why they need it and what they are not looking for.
A successful marketing strategy includes the four key elements of the Marketing Mix: product, price, place and promotion. Consumer behavior can provide insight into how each of these elements should be used:
- What kind of product should the company promote, and how should it be packaged?
- How much should it cost?
- Where should it be sold?
- How should it be promoted?
With consumer behavior research in hand, companies can answer these questions more effectively, and ensure their product launch is successful.
Create the Right Messaging to Get a Response
The way a business communicates with their prospects and customers is a vital part of their success. Consumer behavior helps businesses to understand what their consumers value. As a result, businesses can craft their messaging based on what is most important to the subset of the market they are targeting.
Not all consumers value the same benefits, so it’s important for businesses to segment their consumer base. This ensures that they entice their prospects with highly targeted messaging. For example, if a local bakery wants to reach a health-conscious subset of their market, by studying consumer behavior they can learn that these consumers want gluten-free and sugar-free treats. By leading with those benefits, that bakery can better appeal to their market.
On the other hand, if the bakery also has customers who don’t care about health benefits but only care about how a product looks, they can appeal to those consumers by focusing on their fantastical designs. While those treats may be gluten-free and sugar-free, if that market segment doesn’t care about those benefits, they are irrelevant.
Get Invaluable Feedback from Consumers
One of the main benefits of consumer behavior research is that it provides businesses with insight into what their customers think. Conducting this kind of research doesn’t need to be complicated or expensive. There are many ways small businesses can get feedback from their customers in order to improve their business:
- Online surveys sent via email
- Free samples of products in return for feedback
- Focus groups for testing out new products
- Personal interviews with high-value customers
Once you have the data you need, it’s important to analyze the information and apply it to your business. Refining your strategy can help you to create products and campaigns that appeal directly to your target market, mitigating risk for your business while improving your chances of success.