Consumer behavior is concerned with the study of consumers and the emotional, mental, and behavioral processes they undergo in determining which products or services to use or discard. The idea behind consumer behavior assumes that consumers play various roles in the marketplace.
They might act as users or payers or the information provider for other users. Based on the roles that a consumer plays, marketers can determine the products consumers are looking for, the price they are willing to pay, and the best way to make consumers take notice of the products.
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The study of consumer behavior is important because it reveals the tools a marketer can use to influence their decision in choosing a product. By studying consumer behavior, marketers can place themselves in the shoes of a consumer – and therefore, relate more to their psychology.
For example, as a consumer, you might be more loyal to Brand A than Brand B. By analyzing consumer behavior, Brand A can take further steps to retain loyalty. On the other hand, Brand B can study consumer behavior to find the best way to present their products, so that consumers are more inclined to switch to Brand B from A.
The Ultimate Guide to Consumer Behavior
Types of Consumer Behavior
The thought process behind a consumer’s purchase decision can vary widely. For example, the factors that a consumer would consider before buying a pizza would greatly differ from that before buying a car. The risk involved with the purchase a consumer makes influences their buying decision. This thought process is called consumer buying behavior. Primarily, there are four types of buying behavior, as follows:
Habitual Buying Behavior
Habitual buying behavior, as the name suggests, is concerned with the daily habits of a consumer. It includes the products that a consumer might buy regularly for their daily routines – such as a loaf of bread or a bar of soap. Generally, consumers do not put much thought into the purchasing decision. This means that a consumer has low involvement in the purchase, and thus, the buying behavior is influenced more by habit than other factors.
When consumers buy products for their daily routine, they only look at a handful of factors before settling on the product that they choose to buy. It might be their favorite brand or the one that they have used since childhood – and they had no incentive to change it so far.
In habitual buying behavior, consumers chiefly rely on the brand that they are familiar with the most. They do not rely on research – if they are unhappy with a particular brand, they simply move on to another.
For marketers, this makes influencing consumer behavior for daily products quite tricky. Since consumers depend entirely upon brand familiarity, brands need to advertise their products so that they gain attention. This makes the brand more memorable, and the consumers are more likely to buy it the next time they visit the store.
Complex Buying Behavior
Complex buying behavior, on the other hand, is almost the opposite of habitual consumer behavior. In complex buying behavior, consumers are highly involved in the purchasing process. Usually, it is encountered when consumers tend to buy an expensive product or one that involves a lot of risks. In that case, consumers will spend hours on research before settling on a product that they think is the best for them.
For example, when you are buying your first car, you probably would not settle for any car that you see. You will consult friends and family, research online, and consider the change in your social status before finally deciding to visit the car dealer.
Similarly, if you’re planning to take a vacation abroad, you will probably spend weeks choosing a destination, so that you can receive the maximum satisfaction from your vacation.
This means that normal advertisements for habitual products would not work on consumers making a complex purchase decision. Marketers would need to put themselves in the consumers’ shoes, and help them understand their products. Since consumers create an opinion about the product even before buying it, marketers would need to advertise the products in such a way that it influences consumer opinion.
Dissonance-Reducing Buying Behavior
Dissonance-reducing buying behavior relates to the purchase of products where the consumers are greatly involved. However, this is not necessarily because of the high risk that the consumers are taking.
In dissonance-reducing buying behavior, consumer involvement is influenced by high prices, infrequent usage, and low availability of choices with most brands offering almost the same product. In this case, despite consumer involvement, they tend to go with a product that is the most available.
For example, when you’re buying a lawnmower, it might be difficult to distinguish brands as all lawnmowers serve their main purpose – they cut grass. At the same time, they are expensive, but you probably wouldn’t use them much.
In this case, you would choose one that fits your budget and is the most convenient – perhaps the brand has a service center only a block away from your home. In any case, you would rely on convenience and budget more than research.
For products such as this one, consumer behavior is not dependent on risk. Rather, consumers undergo ‘dissonance’ – they look for assurance that they made the right choice. For marketers, the main goal here should be to ensure that the consumers are satisfied with their purchase and continue to use the product. Marketing campaigns for these products can focus on repeat purchases by offering discounts and incentives.
Variety-Seeking Buying Behavior
Variety-seeking consumer behavior is very similar to habitual buying behavior, but it’s not exactly the same. Whereas in habitual buying behavior, consumers stick to one brand because it is the most convenient for them, in variety-seeking buying behavior, consumers switch from brand to brand, and their involvement in the purchase decision is low.
In this type of buying behavior, consumers do not care about the brand – they simply switch out of boredom or curiosity.
Why would consumers switch brands if there is no brand dissatisfaction, to begin with? Let’s take pizza for example. After having pizza from Pizza Hut for many nights, you might simply grow bored of the taste.
So the following night, you might decide to spice things up, and order pizza from Domino instead. In this case, you switched brands – not because Pizza Hut offers bad products, but out of sheer boredom and monotony. In other words, you were looking for variety.
In variety-seeking behavior, there is no brand loyalty, which makes it difficult for marketers to retain consumers. One way to do this would be by releasing products of different versions but of the same brand. For example, if Pizza Hut offered different types of pizza, you might choose not to switch brands, and order a different flavor instead.
The Buying Decision Process
Place yourself in the shoes of a consumer. Sometimes, if you see a dress you like, you might decide to make an impulse purchase. On the other hand, if you’re buying a car or a house, you’re probably going to think long and hard about the best possible purchase you can make. In either case, you thoughts will go through several stages before deciding whether or not to buy the product. This entire journey is the consumer’s buying process, and can be divided into five steps:
Need or problem recognition is the first step in the buying decision process. It is at this step that the consumer recognizes that they have a need that has to be met. It could be something as simple and primal as “I’m hungry. I need food” to something complex such as “I need to buy a camera because I want to try out photography.”
The “need” can come in many different forms. It can be because of internal stimuli, as in the case of hunger. Or, it could be because of external stimuli (such as advertising), as in the case of photography.
In the case of hunger, the consumer recognizes that they need food without having any external influence. On the other hand, the consumer might have run into a street photographer and thought it looked cool, which instigated his desire to buy a camera.
However, having a need is not enough to make a purchase. Other factors come into play – such as budget and time constraints. Since consumers have a limited amount of money and time, they cannot have all their needs met. So they prioritize some of the needs more than others, which brings us to the second step of the process.
Once a consumer recognizes that there is a need or problem that needs to be solved, they began to seek more information regarding the problem, so that they can find the best product or service to satisfy their needs. This stage of the buying decision process is known as an information search.
In this step, a consumer tends to seek out information about the product for different sources. Let’s take the camera as an example once more.
- Personal Sources – The consumer might decide to ask a photographer friend or family member about the best camera out there.
- Commercial Sources – The consumer might decide to visit a camera store and look at the various brands available.
- Public Sources – The consumer might choose to look up photography blogs on the Internet or look up magazines related to photography.
- Experimental Sources – The consumer might borrow a camera from a friend and see how much they like it.
This is also the stage in the buying decision process where the consumer identifies alternative products that satisfy their needs as well. For example, an individual might choose to go for a simple point-and-shoot camera or a fancy DSLR. After identifying the different alternative products and brands that can satisfy their needs, the consumer moves on to the third step – evaluation.
Evaluation of Alternative
With enough research and information on alternatives gathered, the consumer then begins to analyze the different alternatives they have at their usual. This is the third stage of the buying process, and this is the step that determines what the consumer intends to purchase.
This is also the stage where consumers diverge the most since different consumers use different metrics to make the choice. Besides, different consumers collect information from different sources, which also influence their decision in the purchasing process. Therefore, consumer behavior in this step varies greatly.
For some consumers, the budget might be a key factor in choosing the product, and so they might prioritize price the most. For other consumers, for whom money isn’t a limiting factor, they might compare attributes such as the brand, reviews from friends, features, etc.
For example, when buying a camera, a customer might look for the availability of lenses, customizability, style, portability, and so on. In some cases, consumers might also be influenced by advertisements or recommendations of friends, which can be biased and might not depict a true picture.
Since this stage is so unpredictable, marketers must observe consumer behavior carefully, and determine their marketing strategies based on the patterns the consumers follow.
This is the step where the consumer decides to make the purchase or forgo it. Once the consumer has gathered all the information and evaluated them, they can then decide whether the purchase will be worthwhile for them or not.
A consumer can choose to take this step within a few minutes or wait for years. For example, when ordering takeaway, the information search and evaluation simply takes minutes when you look at the menu and then make a decision to buy or not buy food.
On the other hand, even after evaluating all the pros and cons of different brands of cameras, you might take several more months to save money before making the actual purchase.
The decision to purchase a product also depends on other things. If the order and delivery process is complicated, the consumer might choose to give up and look for other alternatives.
On the other hand, if the consumer chooses to follow through with the purchase, they then need to deal with technicalities such as making the transaction and receiving the delivery. As marketers, making the purchase process easier can help consumers follow through with their decision to purchase.
Post Purchase Behavior
Once a purchase had been completed, you might tend to think that the buying decision process is over. However, there is still one crucial step left that would influence future consumer behavior, and determine their purchasing behavior in the future. This stage is called the post-purchase behavior.
The post-purchase behavior is the stage where the consumer determines whether they are satisfied or dissatisfied with their purchase. The consumer undergoes a cognitive dissonance and wonders whether they made the right decision.
In this step, the consumer scrutinizes the purchased product, compares all its pros and cons, evaluates their satisfaction in using the product, and determines whether they are happy with it. Their journey through this buying process will determine their behavior next time and will influence their opinions when making a new purchase.
Therefore, this is not a step that marketers can take lightly. Even after the completion of the purchase, marketers must assess the consumer’s reaction to the purchase. This can involve the conduction of surveys or market studies that analyzes customer satisfaction. The answers of the customers will tell businesses whether they need to make any changes in their products or marketing strategies.
Model of Consumer Behavior
It’s no surprise that no two people are alike, so no two people will make the same purchasing decision in the same way. However, you can’t account for each consumer’s buying behavior separately. That is why economists and psychologists have come up with different models that help explain why and how consumers choose to purchase things. There are many models of consumer behavior, and some of the most notable ones are mentioned below.
According to the Learning Model, all consumer behavior occurs due to drives, stimuli, responses, and reinforcements. Classical psychologists argue that living beings are driven by primal needs such as food and shelter, as well as learned needs such as fear. If a need (or stimulus) arises for an individual such as hunger, they will respond by being driven toward food, which will meet the need that has arisen.
Over time, the consumer learns to associate the connection between stimulus and response. As a result, every time the consumer notices the arousal of a need, they will respond in a way that grants them maximum satisfaction.
Economic Man Model
The Economic Man Model is concerned more with economics than the psychology of humans. This model considers consumers to be a perfectly rational being, and that they make decisions based on utility. Since resources are limited, consumers will choose those products in such a manner so that their utility or satisfaction is maximized.
This model assumes that consumers have full knowledge of what they want, and how much benefit they will receive from each product. The model also takes price as the only sacrifice the consumer makes in exchange for utility. In other words, the consumer aims to maximize their satisfaction at the expense of their purchasing power.
The Sociological Model considers consumers to be members of groups or institutions in a society. As a result, consumer behavior is not only influenced by their own desire for satisfaction but the desire to satisfy the groups as well. For example, you might be influenced to buy a particular product due to recommendations from your family or friends.
Similarly, depending on your occupation, income, class, or residence – you might have a desire to fit in, and thus, adjust your lifestyle to be in accordance with groups sharing the same social status. For example, living in a high-income neighborhood might motivate you to buy a luxury car instead of a regular one.
The Psychoanalytic Model delves deeper into human psychology than the other models for buying behavior. This model is largely based on the works of the Austrian psychologist Sigmund Freud, who theorized that the needs that drove a human-operated both at the conscious and subconscious levels.
According to him, the consumer’s mind consists of their fears, desires, and longings, as well as the desire to fit in with societal norms. A consumer makes buying decisions based on these motives, and thus, marketers can target their products accordingly.
Characteristic Affecting Consumer Behavior
As we’ve seen, consumer buying behavior can be divided into several steps – starting from identifying a need to market research to actually buying the product. All these steps come from nowhere – they are influenced by several factors that affect the consumers. These steps determine what a consumer decides to purchase, why they decide to purchase it and how much time they spend on making the decision. These factors can be classified into several categories such as:
One of the most common factors that influence consumer behavior is their personal attributes. Things such as age, occupation, income, lifestyle, taste, etc. are all factors that fall within this category. These personal factors differ from one person to another, as no two people are the same.
For example, a college student might have a buying behavior geared towards textbooks and junk food, whereas a retired person might spend more on medication and their hobbies. As a result, marketers of a fast-food chain might be more focused on targeting college students rather than other consumer groups.
As stated beforehand, humans are social creatures, and therefore, they are greatly influenced by the people around them. Peer pressure from family, friends, and colleagues can greatly influence what a consumer chooses to buy or not to buy. A person that watches his family buy particular toothpaste throughout their entire childhood might continue to buy the same toothpaste throughout his adult life as well.
Social status also influences consumer behavior. For example, a CEO of a multinational company might choose to buy more expensive products that reflect his position compared to his employees.
Culture plays a big role in the buying behavior of consumers. A person who has grown up or spent years in a particular community will subconsciously be influenced by the behavior of members of that community.
For example, a person who had grown up in China his entire life might be more familiar with Chinese products, and therefore, decide to buy them instead of testing out products from other countries. Besides, even amongst cultural groups, there can be several subcultural groups that have different interests in different products.
Some of the most important psychological factors that affect buying behavior are:
- Motivation – A person who would be motivated by his personal needs and social needs are more likely to make a purchasing decision. A person concerned for his safety will be more likely to buy security cameras.
- Perception – Consumer perception is influenced by advertisements, promotions, and reviews. This can affect a person’s opinion to buy or not buy a particular product.
- Beliefs – Consumers have certain beliefs and attitudes towards certain products, which can bias their decision in purchasing those particular products.
- Learning – As consumers use a product, they learn its pros and cons. As they acquire this knowledge, it influences the decision of their next purchase.
The Buyer Decision Process for New Product
Consumers experience several trains of thought before finally deciding whether or not to buy a product, as we’ve already seen above. However, this only applies to products that the consumer is already aware of. For new products – the process differs quite a bit. In this case, “new” does not necessarily mean newly introduced products in the market, but rather the products about which a consumer has found out about recently. In the case of new products, the buying decision process depends on several factors:
Individual Differences in Innovation
When it comes to new products, the response of people widely varies. Different consumers adopt new products at a different rate. Some consumers are willing to jump ship as soon as a new product is announced, whereas, on the other end of the spectrum, other consumers only adopt it when the majority has proven it to be satisfactory. As a whole, consumers can be classified into five adopter groups based on their response:
- Innovators – These people are the ones who love taking risks. They try new products fast, and are the first ones to adapt to it.
- Early Adopters – These consumers are the opinion leaders in their communities. They take calculated risks and adopt products early but carefully.
- Early Majority – These groups of people adopt products before the new person, but they do not lead the frontlines. They adopt new products only when they see their leaders adopt them as well.
- Late Majority – These consumers are suspicious of new products, only adopting them when the majority has tried them out.
- Laggards – These people are not open to innovation. They are more willing to stick to tradition, and they only jump ship when the new product becomes a tradition itself.
Stages in the Adoption Process
Besides the differences in the willingness of consumers to switch to newer products, the consumer behavior for a new product is also dependent on the adoption process that consumers go through. Generally, the adoption process can be broken down into five steps:
- Awareness – This is the step where a consumer becomes aware of a particular product. They might hear the product being mentioned on the radio, read about it on the Internet, etc.
- Interest – The new product perks the consumer’s interest. They seek out information about the innovative product. This might include the price, the manufacturing company, features, etc.
- Evaluation – Consumers start weighing the pros and cons of trying a new product, and debate whether switching to a new product would be a sensible move.
- Trial – The consumer tries the product on a small scale, and tries to determine whether using a new product will be worth it. This is the step where a consumer makes his final decision.
- Adoption – If the consumer decides that the pros outweigh the cons, they might choose to switch to the new product full-time.
Influence of Product Characteristic on Rate of Production
Consumer behavior alone does not determine whether a new product makes it or breaks it in the market. It depends on the product as well. There are several characteristics of a new product that determine whether that product will influence buying behavior, and if so, how long it would take. Five characteristics influence this decision:
- Relative Advantage – This characteristic is concerned with how much the new product is better than its competitors. If the innovation offers something that no other products offer, it has an advantage.
- Compatibility – This characteristic determines how much innovation is compatible with its consumer group. A new electronic product with a 3-pinned plug in an area where most sockets are 2-pinned will not be compatible.
- Complexity – A product that is difficult to use or understand would not be appreciated by its customers. The more complex a product is, the less momentum it has.
- Divisibility – Divisibility is concerned with the degree to which the innovation can be tried. For example, consumers can try a new pen for a while before deciding to switch permanently, but they cannot try out a new house.
- Communicability – This characteristic concerned with how much of the innovation marketers or consumers can describe it to other consumers.
Business Buyer Behavior
Not all products are sold aimed at individual consumers. Most businesses sell products and services to other organizations, which use them to build a final product for their customers. This type of buying is called organizational buying or institutional buying. Since business purchases often involve a large number of products and large sums of money, businesses need to put in a lot of thought before finally selecting a supplier and making a purchase. This is known as business buying behavior and it differs greatly from that of an individual consumer.
Major Types of Buying Situations
- Straight Rebuy
The straight rebuy is the easiest and the most reliable type of buying situation in businesses. In simple terms, straight rebuy refers to the routine purchase of products that are needed for running a business. For example, a business needs stationery such as paper, pens, pencils, toner, etc. for their work. When ordering stationeries, a business will probably rely on a familiar supplier and will not modify its monthly orders unless necessary.
This is a business situation where suppliers capture the market by maintaining product and service quality. Unless the buyers are dissatisfied with their current supplier, this is a situation where it is difficult for new suppliers to break into.
- Modified Rebuy
A modified rebuy differs greatly from the straight rebuy, as it is a buying situation where buyer businesses are willing to try new and improved products. If the buyers are happy with the new products, they might choose to shift to the new product permanently.
This is a situation where the buyer has used the products previously but modifies the suppliers, terms, price, or product specifications in their next order.
For example, a business might not be happy with a particular word-processing software that their company uses. When their subscription ends, the business might want to switch to new word-processing software that costs less and offers better features.
- New-Task Situation
In a new-task situation, the buyer has the liberty to purchase a new product without being aware of its effectiveness. In this case, the buyer has to trust the supplier that the product will be satisfactory – without having the option to try it first.
Examples of a new-task situation include the purchase of office space, generators, or super-computers – which can require months or years to set up or delivered. However, buyers still put some thought into the buying process. For a new task situation, businesses often consider the importance of the product and the overall price before making a purchase decision.
Participants in the Business Buying Process
Since businesses often make purchases that involve larger inventories and larger sums of money than consumers, their buying processes are more intricate and complex. Usually, many different players in an organization are involved in the buying process.
This includes employees from different sections of the organization such as finance, accounting, purchasing, management, and IT. Together, the group is referred to as a buying center, and this group involves the members who would be involved in the business purchase.
Each member of the buying center plays a certain role as a participant. The participants might include:
- Users – The users are the ones who will be using the product. They will be the ones who would determine the product specifications and evaluate their performance after usage.
- Buyers – The buyers are the participants who are concerned with the actual purchasing procedure. They determine suppliers and help negotiate the terms of purchase.
- Influencers – The influencers work closely with users. They help develop specifications for a particular product and suggest alternatives, including new and innovative technologies.
- Deciders – The deciders are the ones who decide which products to use. They usually have the final say.
- Gatekeepers – The gatekeepers are the ones who control and manage the flow of information in buying centers, and are often the ones who deal with vendors.
Major Influences on Business Buying
- Environmental Factors
What a particular business purchase is greatly influenced by the environment. This includes the current economic environment of the region, government regulations, location, advancement in technology in the industry, and the culture of the region.
For example, a government ban on the use of certain chemicals will affect the raw materials that pharmaceutical companies will purchase. Similarly, during economic uncertainty, business buyers may choose to cut back costs and utilize their inventories as much as possible.
In these cases, the decisions taken by the business buyers are influenced by the environment such as the government and the economy.
- Organizational Factors
Much like how individual consumer behavior is influenced by their personal beliefs and that of society, the business buyer behavior is influenced by the policies of the organization as well. Every organization has its own objectives, procedures, structures, and systems.
These aspects play a key role in the purchasing process of a business. They determine how many people are involved in the process, who they are, and the criteria they use to select products.
For example, some businesses might focus on high-quality products, whereas other businesses might want to cut back expenses and therefore, select products that cost the least.
- Interpersonal Factors
As mentioned above, the buying process of a business is more complex than that of an individual. It involves many participants – all of whom play a critical role in the business buying process. These people are all individuals who might have their own agenda and motives in influencing the business to purchase particular products.
How effective these motives will be – depending on the relation between the participants and the group dynamics as a whole. This makes assessing interpersonal factors difficult. However, things such as authority, status, and persuasiveness are some of the factors that can be considered to be interpersonal in the business buying process.
- Individual Factors
This is closely linked with the interpersonal factors, but there are some differences. Since many participants are involved in a business buying process, it is almost always given that they will influence each other due to their motives and preferences.
However, these motives stem from the personal characteristics of the person, which can include things such as age, education, income, social status, and personality.
For example, an older person might suggest purchasing an older technology because they are more familiar with it, whereas a younger participant might be more open to risk and willing to try newer equipment.
Business Market of Business Buyer Behavior
Businesses do not only sell products to consumers, but they also buy and process large quantities of raw materials, equipment, plants, and services from other businesses. In a business market, both the buyer and the seller are dependent upon each other to flourish, unlike the consumer market. This means that the business markets work differently than consumer markets. Thus, in a business market, sellers need to understand the needs of the buyers and vice versa.
Market Structure and Demand
Business markets are very different from consumer markets, and so their buyer behavior is very different as well. For starter, in business markets, there are fewer buyers (as their fewer businesses than consumers) but they are larger than the consumers. As a result, B2B markets involve a much higher quantity of money and items than in consumer markets.
In business markets, the buyers generally have a close supplier-customer relationship with their sellers than in consumer markets. As a result, the sellers have more flexibility in customizing their offerings to their buyers.
In terms of demand, business goods tend to have a derived demand – the demand of the buyer businesses depends upon the demand of the consumers. For example, if the demand for bread falls amongst consumers, demand for wheat might fall amongst bread-manufacturing businesses as well.
The demand is also inelastic – meaning that, the demand is not affected by price in the short run. This means that even if the price of raw material rises, buyer businesses will stop using that particular raw material. However, they might switch suppliers. The demand for business goods is more volatile as well, especially in the case of new plants and equipment.
Nature of the Buying Unit
As the market structure for business buyers differ largely than that of consumer markets, the buying units involved in B2B purchases differ widely as well. For businesses, the process of buying is not as simple as going to the store and paying for a particular product.
Business buying units require more purchase procurement effort, and the buying process is usually more complex. It involves a lot of formalities, written agreements, and contracts that do not apply to consumer markets. Besides, as opposed to consumer markets, buyers and sellers are dependent on each other in business markets.
As a result, purchases of a business vary greatly from that of a consumer. B2B purchases often involve large sums of money and large numbers of inventory. Businesses also consider technical and economic aspects, involve people in different departments of the organization, and tries to determine whether a purchase would be feasible and worthwhile for them.
In other words, businesses undergo a complicated process before making a purchase decision. That is why businesses often employ committees of experts who make decisions regarding the purchase of products and the processes that involve them.
To conclude, the study of consumer behavior is one of the foundations of marketing that can help determine the success of a business. The customers are what drive any business. Therefore, one of the first and foremost goals of business would be to ensure that the customer is satisfied. By studying the buying behavior of consumers, a business can identify what consumers want, how much they want it, and how to give it to them.
Thus, by taking the emotional, psychological, and economic conditions of consumers, a business can develop the perfect marketing strategy to influence their buying behavior. Not only does it help your business grow, but it keeps your customers happy as well.
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