Posted by. Disrupt Tech. March 15, 2022
Consumer behavior is something that we all are familiar with. To refresh our memory, consumer behavior is the consumer decision-making process when it comes to purchasing goods and services.
The study of consumer behavior involves analyzing consumers and their behavioral patterns. Moreover, it is a study including their actions and driving forces that lead them to make a decision while purchasing a good or service.
Now the question arises, Why is studying consumer behavior important?
To answer this question, the most important factor of understanding consumer behavior is it helps to predict what consumers expect from a product or service. It helps to identify what makes a person buy something. When an organization decides to launch a new product, it has to do thorough research on the likes and dislikes of target consumers. Only then they can design the product that customers want.
Now that we know what consumer behavior is and how it can impact sales of a good or service, let’s take a look at the importance of consumer buying behavior.
Market segmentation is a way of targeting different groups of consumers based on similar behavioral characteristics. It can be based on their demographics, psychographics, or even geographics.
A different marketing approach is needed for a different group of consumers. However, the number of customers you have now identifies the people who are most likely to be your future customers. If your current customers are impulsive, there is a high possibility that your future customers will also be impulsive.
For example, if BMW has a group of customers who earn more than 40 lakhs a year, it is possible that they will have the same group of customers in the future. Having said that, market segmentation gives a clear picture of who your customers are and who can be your customers.
From demand forecasting to sales forecasting, it is important to predict the future if an organization does not want to waste its resources. The same product that is on-demand in winter might be unwanted by the consumers in summer.
However, forecasting consumer buying behavior will help an organization to predict market trends. This strategy is adopted by renowned brands around the world. For instance, Mcdonald’s has analyzed the future demand of consumers for healthy food and added healthy food options to their menu.
Having said that, analyzing buying behavior a company can scale their business by cutting manufacturing and warehousing costs. It can utilize the resources fully. Moreover, the company can create new production strategies based on forecasted results.
How many of the following names have you heard before?
♦ New Coke
♦ Crystal Pepsi
♦ Colgate Kitchen Entrees
♦ Earring Magic Ken Doll
♦ Wheaties Dunk-a-Balls Cereal
These are some of the big names that failed in the market. It is a common scenario to see new products failing in the market despite being launched by some of the big brands. Organizations are constantly trying to come up with strategies that can save their new product line in the market. What they forget to do is thoughtful research on consumer behavior.
When Nike conducted consumer behavior research, they found that most of their consumers are non-professional athletes. They want to be athletes and follow them on a regular basis. Having found this, Nike introduced a campaign called “Find Your Greatness” during the 2012 Olympics in London. The major aim of this campaign was to promote the willingness of being an athlete regardless of their physical abilities. However, this data-driven campaign got enormous popularity and helped Nike to target new consumers.
One of the most important reasons to study consumer behavior is finding out the competitors in the market. More specifically finding those who are selling similar products.
A thorough analysis of competitors answers the following questions.
♦ Is your customer buying from your competitor?
♦ Why is your consumer buying from your competitor?
♦ What are the most attractive features of your competitors that make the consumers switch?
♦ What are the lackings that you have?
Once you have found out the answers to these questions, you can identify your competitors in the market and list down the reason why consumers prefer them over you. Having said that, a thorough analysis can help you to achieve a competitive advantage in the market.
Customer Retention can be achieved by increasing brand loyalty. When we said analyzing consumer buying behavior, we meant a 360 analysis that starts from attracting customers to retain them.
If an organization wants to sustain itself in the competitive market, it has to find strategies that can help to increase retention. And studying buying behavior plays an important role here. From identifying customer likes and dislikes to taking their feedback seriously, all you have to do is research consumer behavior.
When a customer is delighted by the product or service he/she will repurchase. Hence, you have to design your product in a way that makes the customer come back again and again.
Having said that, it is essential to retain customers and the only way you can do this is by understanding and focusing on their patterns of buying a good or service.
In order to create marketing campaigns, you need to know consumer buying behavior. Only then you can create an effective marketing campaign for your target market. Each campaign serves a different purpose for a different group of consumers. Hence, it is important to know your consumers first and then design marketing campaigns.
For example, if your target audience is the kids market, you have to look for platforms such as school programs, social media of the mothers. You have to design different messages for different groups of people.
Studying consumer behavior enables you to understand the driving factors that motivate a consumer to make a purchase decision. Also, you can tap on the untapped desire of the consumer that will drive them to buy your products or services. It will not be limited to advertising only. While creating a brand logo, packaging, coupons, and gifts, you have to be careful about consumer preferences.
There’s no doubt that analyzing consumer buying behavior is vital. If you are planning to create an effective marketing plan, you can download the diagram and follow it accordingly.
Now that you have come to this point of the article, you must be quite clear why consumer behavior is essential. Leading companies such as Coca-cola and BMW are constantly thriving to improve their current products and investing in developing new products. They are conducting market research thoroughly to understand their consumer behavior. Not to mention, these brands are studying consumer behavior to understand their needs and wants.