What is Consumer Behavior? Why is it Important?

Have you ever thought about why you favour one brand over another, or what makes you click on the ‘buy now’ option while shopping online? That’s the science of consumer behaviour, the study of how and why people make decisions about purchasing. Consumer behavior plays a critical role in defining products, marketing strategies, and branding, as well as fostering customer loyalty. 

In this blog, we will cover the definition of consumer behavior, the factors that influence it, the importance of consumer behavior, the various types, and also provide some consumer behavior examples.

What Is Consumer Behaviour?

Consumer behavior can be described as the study of how individuals, groups, or organizations select, purchase, and use goods, services, and ideas to satisfy their needs and wants. It is the study of the processes that consumers use to make decisions and the overall experience of consuming and using goods and products.

Must Read: Why must a marketing professional do an MBA?

Why Is Consumer Behaviour Important?

Understanding consumer behavior is crucial, as it enables businesses to better understand their audience, including their preferences and purchasing habits. This process guides professionals in developing effective marketing strategies and creating products that enhance customer satisfaction and loyalty. This insight also gives companies a competitive edge by helping them stay ahead of market trends, emphasizing the importance of consumer behavior. 

You might also like: The 4Cs of Marketing

Types of Consumer Behaviour

There are four main types of consumer behavior: complex buying behavior, dissonance-reducing buying behavior, habitual buying behavior, and variety-seeking buying behavior. These types are classified according to two criteria: the degree of consumer involvement and the perceived differences among brands.

Also Read: Difference between B2B, B2C, and D2C

Type	Description	Example
Complex buying behavior	This behavior occurs when consumers are highly involved in a purchase and see exceptional differences between brands.	For instance, certain purchases, such as a car or a house, undergo extensive research by the consumer, who compares features and considers a good deal before making a commitment to the purchase.
Dissonance-reducing buying behavior	In dissonance-reducing buying behavior, consumers are highly involved due to either the cost of products or infrequent purchases. Furthermore, such products may have limited availability with minimal differences between brands. Hence, people often buy what’s readily available based on options, time, or budget.	For example, when purchasing a lawnmower, the consumer may need to conduct extensive research, especially if they have no prior experience with the product or brand. In this case, they may compare different models and choose one based on brand familiarity or price.
Habitual buying behavior	Habitual buying behavior occurs when a purchase is made repeatedly, often without much thought. The consumer sees few differences among the brands found on the shelf. In this case, they may always opt for the same brand or whatever is available and affordable..	Examples of habitual buying behaviors can be seen for commodities like toothpaste, soap, or snacks, to name a few
Variety-seeking buying behavior	In a variety-seeking consumer behavior, people frequently switch brands. They may not have a problem with their current brand but want to try something new. Their involvement in the purchase is low. Since the brands have noticeable differences, consumers switch brands easily and affordably out of curiosity.	Some consumer buying examples in this category include switching brands for snacks, such as switching from one type of chip to a different flavor or a different brand, or trying out new shampoo brands.

Also read: The ROI of an MBA in Digital Marketing: Is it worth it?

Factors Influencing Consumer Behaviour

Psychological Factors

Human psychology plays a massive role in how we shop and make buying decisions. From noticing a product to finally buying it, our thoughts, feelings, and perceptions guide us through the entire buying process. Factors such as motivation, beliefs, and past experiences can all influence our purchasing decisions and preferences for one brand over another.

• Motivation: It is the driving force behind every purchase decision. A need triggers motivation, which in turn directs behavior to fulfill that need.
• Learning: Learning is the process of acquiring knowledge, which, based on experience, may change consumer behavior.
• Attitudes and Beliefs: Attitudes and beliefs can serve as the basis of consumer decision-making. Attitude involves lasting assessments of products, while belief refers to the knowledge that individuals have about a product.  
• Perception: It is the process by which consumers perceive various product information. 

Social Factors

Being part of a social world, consumers are influenced by the people surrounding them. Hence, family, friends, and social groups shape the preferences and shopping behavior of people. Depending on social influences, consumers may be drawn toward certain purchases, retailers, and shopping destinations. Furthermore, there are other social influences, such as peer pressure and social media, that can also actively influence consumer choices.

• Family: Your family plays a significant role in shaping your purchasing decisions.
• Reference Groups: Many people seek approval and validation from reference groups when making purchasing decisions. 
• Roles and Status: Your role in society also influences your buying decisions in many instances.

Cultural Factors

Cultural factors refer to the values, beliefs, and norms that are common to a group or society. These factors influence the way people connect with brands and their purchasing decisions. With globalization and the intermingling of cultures, cultural awareness is becoming increasingly important for companies. Understanding culture and subcultures enables companies to develop more effective strategies across international markets.

• Culture: Culture refers to the shared way of thinking and behaving that distinguishes one group of people from others. It is composed of the values and traditions that influence how people live.
• Subcultures: Shared beliefs and values are among the key cultural factors that influence consumer behavior. Additionally, ethnicity, religion, and geographic location are significant factors that influence the definition of consumer behavior.
• Social Class: Status and social class have a significant influence on the purchasing behavior of individuals. It also impacts brand preferences and consumption patterns.

Personal Factors

Personal factors vary from person to person, and individuals make different decisions in the market based on their unique characteristics. These include age, life stage, job, income, lifestyle, personality, self-perception, and gender. For example, a student and a working parent will be shopping for very different items. These individual personal factors enable businesses to develop products that cater to different needs and wants. 

• Age and life cycle stage: The buying decisions of people are closely tied to their age and stage of life. Students will have different buying needs compared to parents or elderly people.
• Occupation: The career or occupation of individuals also influences their needs and buying habits.
• Income: The more you earn, the more you buy. An increase in income generally gives consumers more spending power.
• Lifestyle: Your lifestyle, including your interests and hobbies, can also influence your purchasing decisions.

Economics Factors

A strong economy or a weak economy helps determine consumer behavior and market trends. With a country’s increasing financial prosperity, the supply of money among people increases. This, in turn, increases the purchasing power of consumers and helps businesses grow. When the economy is weak, people lose jobs and spend less. The economic conditions affect what, how frequently, and when consumers buy. 

• Personal income: The more a person earns, the more money they spend on goods and services.
• Family income: The combined income of a family influences total spending power and lifestyle decisions.
• Consumer credit: The ease of access to credit makes it easy to buy now and pay later.
• Liquid asset: Cash and other liquid assets also inspire consumer buying habits.
• Savings: Individuals with savings tend to feel more secure and are more likely to spend their money.

Also read: Why choose an MBA in Marketing? 

The Consumer Decision-Making Process  

Before purchasing an item, consumers go through five stages in the consumer decision-making process. For sales and marketing professionals, understanding the stages of the consumer decision-making process can enhance their ability to sell products or connect buyers with their offerings.

Problem/Need Recognition

The first stage begins when consumers recognize the need or desire for a service or product. It can be as simple as buying a new product, purchasing a gift for someone, or anything else. Once consumers identify the need, they gather information to understand how they can fulfill that need or want, which leads to the next step.

This is an opportunity for marketers to identify the needs of their target market. By identifying the need and articulating it in a way that builds trust and attracts attention, they can capitalize on opportunities through increased awareness of the need.

Information Search

In the second step of the decision-making process, a customer may research the product in the market once they recognize their need to identify the best offerings available. To aid in the purchase decision, consumers may employ a combination of research strategies, including online research, product advertisements, in-store product inspections, and discussions with family and friends about options.

Evaluation of Alternatives

When a buyer finds a product or service that meets their needs, they like to compare similar products or services from multiple sellers based on their costs and quality. The availability of the product is another factor that consumers consider when selecting a retailer. This is especially important if they need a product within a short timeframe. When choosing a final product, they may also consider factors such as the product’s brand and market trends.

Purchase Decision

The fourth stage of the decision-making process involves purchasing a product that consumers can afford to buy. There are several sources that customers can use to acquire the product, including finding a local retailer that sells it, visiting a physical store and making a purchase, or ordering it online.

Post-Purchase Behavior

Once consumers purchase a product and use it, they can actually reflect on its worthiness in terms of the money spent. This also helps them understand if they want to make more purchases from that seller or brand. If they like the product, they may leave a positive review on the product page or purchase more of the same items. Most consumers rely on reviews and feedback from online users to inform their purchasing decisions. 

Conclusion

Understanding consumer behavior is crucial for formulating effective marketing strategies. An online MBA in Marketing from the Online Manipal platform equips you with the insights that help drive customer engagement and business growth. By analyzing how consumers think and act, marketing professionals can tailor products and campaigns to make them more effective, foster brand loyalty, and boost sales. An Online MBA in Marketing offers the flexibility and real-world relevance you need. Moreover, the electives offered in the MBA program by MUJ help you tailor your degree to your interests and goals.

Frequently Asked Questions on Consumer Behavior

1.  What are the four types of consumer behavior?

       The four types of consumer buying behavior are: complex behavior, dissonance-reducing behavior, habitual behavior, and variety-seeking behavior. These categories are based on the level of involvement and perceived differences between brands during the purchase process.

2. Why is consumer behavior important in marketing?

Understanding consumer behavior is important in marketing, as it enables marketers to comprehend how and why people make purchasing decisions. These insights would allow marketers to develop more effective products, create more engaging experiences for customers, and effectively develop and implement targeted marketing strategies to increase sales and foster consumer loyalty.

3. How do companies study consumer behavior?

Businesses use surveys, interviews, focus groups, and data analysis to study consumer behavior. These tools show businesses not only what people buy, but also why they made those purchasing decisions.

4. Can consumer behavior change over time?

Consumer behavior can change over time. Such changes can arise from personal experiences, life events, economic growth or decline, as well as broader social and cultural trends. What consumers term as relevant today might look entirely different in a few years.

5. How is online consumer behavior different from offline?

Online consumer shopping behaviors often differ from those in offline settings in several ways. Online shoppers prioritize convenience, price comparisons, and a wider selection of products. Offline, shoppers look to see the product, receive it at the time of purchase, and experience personal service. When deciding whether to shop online or offline, it comes down to whether the shopper values convenience, cost, options, or experience more.

6. What is the role of culture in consumer behavior?

Culture plays a significant role in shaping how people purchase and utilize products. Culture influences people’s likes, product selection, and brand perception. Culture also informs whether people view things as necessities or luxuries. It influences how they interact with advertisements and what buying behaviors are considered normal or socially acceptable.