Successful business owners understand what their customers want since these are the people who purchase and repurchase your product or service and are also the people who are recommending it to other potential future customers.
Companies that know what their clients want and what they expect can also work on customizing the customer experience to create loyalty and repeat business. Understanding customers is the key to giving them good service which in turn results in strong customer relationships and new sales through positive word-of-mouth recommendations. The most important part of sustained business success is knowing your customer base.
Therefore consumer behavior is the study of consumers and the processes they use to choose a product or service for their end-users.
It is crucial to understand consumer psychology and the forces behind customer purchases. This will help companies to innovate their products, market more effectively, and eventually increase revenue. According to American psychologist Abraham Maslow, human decision-making is based on a hierarchy of psychological needs. He theorizes that there are 5 basic needs that motivate human behavior. His hierarchical needs are in a pyramidal shape with the most basic needs at the bottom and the higher intangible needs at the top. A human moves up to the higher-level need once his basic bottom-level needs are met.
At the bottom and the most basic is the physiological needs. These are the most basic human survival needs including food and water, sufficient rest, clothing and shelter, overall health, and reproduction. For example, a person who is in need of food will not buy a wi-fi connection first.
Next comes the safety needs which are all kinds of security like protection from theft and violence, financial, well-being, etc. The third level needs are love and belonging needs or social needs. The next is the esteem needs which are being recognized and having self-confidence etc The highest need is self-actualization needs from which stem education, skill development, etc. When this hierarchy is taken in the context the businesses will be guided while forming their data on consumer behavior regarding what a consumer will need to fulfill their basic needs and to fulfill their higher needs.
Companies need to dedicate a team that researches on the consumer behavior factors like-
Psychological factors that influence the decision-making process. Motivation, experience, perception, attitude, and belief of a consumer influence their purchase decision. Consumers who buy based on their opinion of a particular product or service choose some things overruling others. A product can be extremely good, but if the consumer does not think it is necessary or if they think it is not for people like them they will never buy it.
Social factors like status or class, education level, peers, family, and friends. We can say that social factors reflect a steady and dynamic influx through which people learn different meanings of consumption. Certain products or services will only be considered by the wealthy, for example.
Cultural factors are to be considered while meeting the consumers varying experiences. Consumer perceptions about the safety of sharing sensitive or personal data, such as in the case of online purchases, vary across countries. Ignorance is not bliss: if the customers do feel safe entering their personal or payment details, the business will suffer.
Each culture contains different subcultures such as religions, geographic location, racial groups, and more. Smart business owners segment their customers into several small sections. For example, retailers can design products that meet the needs of a specific geographic group and promote them exclusively to that group. Awareness of the buyers’ culture and how it affects their behavior will enable a company to tailor its marketing strategy or specific ad campaign to succeed.
Economic factors that most affect the demand for consumer goods are employment, wages, prices/inflation, interest rates, consumer confidence, wealth, and age of a particular audience. For example, young people in India (aged 18 to 25) spend less money than their older peers. The reason for this could be because they haven’t been working as long as older buyers. Key economic factors that influence spending power include:
Level of savings
Attitudes toward savings versus spending
So companies should research their target audience in detail. Consider:
Where they work
How they splurge
These data will help in determining the right pricing for the products and services and even lead to creating different designs of the product at different prices attractive to various segments.
Last but not least is the broad spectrum of personal factors which influence buyers. This includes the likes, dislikes, and interests of a particular audience. For example – certain groups will prefer physical books while others prefer e-books. This is the reason why it’s important to engage with the customers and learn what they want so that their requirements are met satisfactorily. This information will help them to understand their market segment – which is, the people who are most likely to buy from them. They can also use this data to develop more attractive advertising campaigns and sales strategies. If businesses create products or services that address their customer’s underlying concerns and desires, they can surely win over them and have leverage over their competitors.
So far we have learned that understanding consumer behavior is crucial while taking the course of business. At the same time, consumer behavior does not remain constant. For example: during Covid -19 most consumers changed their buying priorities because of both internal and external factors.
Internal factors relate to Motivation, learning, lifestyle, and personality.
External factors relate to cultural and market trends and of course global pandemic
So finally building data on consumer behavior gives an edge over others. It improves marketing strategy firstly by deciding on the correct advertising and hiring suitable marketing professionals. It allows a business to incorporate the knowledge of their consumers to make their campaigns more effective and suitable. For example, if a business learns that the consumers prefer e-learning to e-books then their Google ads could be based on that concept.
Different marketing strategies based on the data collected about their target audience could be worked out. The hiring of the right professionals or taking help of digital marketing sites like Godaddy could be done based on the insights they have gained from their consumers. Improved products or services could be designed to make them appealing for their customers and later they can further change it if required based on their consumer feedback.
Companies should explore different types of marketing research methods to gain a better understanding of the people who are most likely to buy their product or service.
Monitoring product feedback can help judge the reason for poor sales.
Suppliers or manufacturers could even offer services to customers, such as Product exchanges, Money-back guarantees, Extended warranties
These services are offered in an effort to retain customers, while simultaneously influencing consumer behavior after a purchase. Understanding consumer behavior also helps in reaching a customer-centric approach to business which in turn gives more turnover. For example, if a fashion trend has changed customers should not be offered outdated designs. Also, it helps in choosing options based on the data about their customers. The consumer data also helps in running customer incentives programs more effectively. Serving customers in the correct way with the data collected gives good customer referrals and loyalty. Higher standards in customer service change the business to a positive mode. This in turn increases sales, profit, and continuous success.
Consumer behavior data should always be based on real-time since it is unpredictable and rapidly changing. For example, Customer spending on household goods declined by 12.6% in 2020 it was expected to increase by 6.6 % in 2021. Thus relying on old data does not help. Accurate consumer data and analysis can be found in Google Analytics social media, Market survey, blog comments, third-party data (research available online), keyword research,question-answer pages, Twitter, and consumer reviews. This information helps in combining different consumer data into the business strategy to make it run in the way desired.
Companies should effectively use their customer analysis data and not get it messed up by having too much or backdated data. It’s best to go with experienced marketing services and professionals who can be trusted and can sort the data effectively. Small businesses can learn to do it themselves via online routes and research. Keeping up-to-date with the consumers is also important to have a successful business. This has to be an ongoing process to have a profitable and growing company.
As someone adeptly said,
“Excellent customer service is the number one job in any company! It is the personality of the company and the reason customers come back. Without customers, there is no company!”