Consumer behaviour studies depict the various stages that a potential or existing client goes through before choosing a certain product available to them in the market. They also help highlight where and how companies can intervene in order to build and maintain the loyalty of their consumers.
A consumer is an individual who makes a conscious decision in regards to the purchase of a product, or service for personal use and whose choice can be influenced by advertising and marketing. Organisations define their target consumers through market segmentation, with subsets defined by the existing or perceived communal interests or needs, such as financial status, hobbies, culture and lifestyle. Market segmentation is crucial, as it narrows the focus of advertising and marketing actions. The choice of a unique selling point, mediums for communication, engagement tactics all depend on effective target audience profiling, as each consumer group will respond differently to marketing stimuli.
The modern consumer is more empowered than before, with immediate and widespread access to information through the use of digital media and smartphones (Kaplan & Haenlein, 2010). Companies need to align their marketing and advertising tactics to the needs and desires of the consumer and given the dynamics of change in the business world, this Chapter will outline some of the key considerations to address.
Designing products or services, altering them and promoting them all depend on the behaviour of the customer and their likeliness to purchase these goods, as well as becoming loyal to a particular brand in a competitive market. Consumer buyer behaviour is the in-depth study of the internal and external factors which contribute to a customer’s decision to purchase a particular product from the competing offers available in the market (Underhill, 2009). There is a staged decision making process behind purchases which guides businesses as to how, when and where they can influence the consumer.
The consumer becomes aware of a gap between their actual situation and their ideal/desired situation. This deficit can be generated by internal (hunger, thirst and other physiological needs) or external stimuli (created by advertising and marketing activities). Successful brands anticipate or create these problems through effective consumer targeting. Consumer needs can be classified as functional, social or change driven.
Once the consumer identifies their need, they will seek information about a feasible solution to their problem. The consumer will identify if any internal information (i.e. previous experience of the product/service and opinion of the brand/company) can help their deliberations. From this, the consumer seeks external information (e.g. views/opinions of peers/family, company/market information) to further develop their thinking. Essentially, brands must meet the expectations of the consumer and be able to anticipate their information needs, making all the required information readily available.
Using the information gathered, the consumer will compare and contrast offerings based on various criteria such as price, utility and brand reputation. Marketing professionals need to understand and anticipate the criteria likely to be applied and ensure that their products and services reflect these qualities. On-line product information now forms a critical part of this consumer evaluation process (Sashi, 2012).
The consumer decides which of the offerings they will purchase, as well as how and where to buy the product. The effectiveness of supply chain management is critical at this stage - if the ‘best’ product (as perceived by the consumer) is not available in a way that meets their core selection criteria (e.g. place, price and specification) then they are likely to consider purchasing the next best alternative.
After purchase, the consumer evaluates their satisfaction following product/service use and can potentially experience post-purchase dissonance, if they feel they should have chosen another brand or product/service type. Customers are increasingly seeking retailers who can offer them the opportunity to change their mind whenever making a purchase that doesn’t subsequently satisfy their needs.
Corporate Social Responsibility practices have prompted organisations and consumers to reconsider the issue of disposal of products. The ethical attitude of the brand towards recycling and environmental impact has become one of the factors which influence the decision of the consumer (Laroche, Bergeron, & Barbaro-Forleo, 2001).
In a competitive business environment, sustaining product differentiation across these distinct stages is becoming more challenging. The modern consumer has the ability to compare and contrast the offerings of all competitors in a specific industry. Consumers develop a systematic selection process, usually at quite an early age, based on the stimuli that they respond best to following targeted advertising (Aaker, 2012).
Consumers purchase goods or services to fulfil a need. This means that businesses need to consider motivational factors in order to understand how best to convince the market to purchase their products or services, as well as how to establish a recognised market presence.
Culture influences consumer choice as it shapes individual and group values, preferences and behaviours. These cultural expectations, perception and habits can guide companies in adapting their product/service and marketing strategy (Soares, Farhangmehr, & Shoham, 2007). The potential influence of sub-cultures can also be considered to tailor specific products/services to a narrower, more defined consumer group, building both detailed market knowledge and consumer brand loyalty.
Distinct and emerging cultural trends also influence consumer behaviour, with the rapid growth of social media applications providing a defining example. Brands now have to maintain their own social media presence and associated ‘following’ to maintain market share.
Individuals will be influenced by their family and social groups they belong to or aspire to join. Family consumption patterns are often replicated by the next generation and this can result in nostalgic marketing efforts, seeking to use childhood memories and experiences to create brand loyalty and define purchasing decisions. Social grouping can influence diverse areas (e.g. clothing, music, eating, drinking, hobbies, holidays etc.) and this becomes even more complex when aspirational purchasing drives are considered (e.g. demonstrating status through a car or watch choice).
The relative affluence of the social group will also drive selection criteria. Those with high disposable income will be more likely to consider image, reputation and perceptions of luxury branding, whilst those at the other end of the spectrum will focus on price, utility and overall value for money.
The age, occupation, economic condition, lifestyle or personality of an individual all shape purchasing decisions. This buying behaviour is closely linked to their economic condition, although lifestyle and personality will influence how disposable income is used.
The intrinsic or external motivation which prompts the consumer to identify a need is a prerequisite for the entire purchase process. Physical needs like hunger or thirst drive consumers to seek food and drink and businesses seek to create appealing imagery, sounds and smells to attract consumers. Recognition and self-esteem are also needs which brands target in their advertising/marketing efforts. Beliefs and attitudes also influence consumer behaviour and product/service features and performance can almost become irrelevant for an individual who has developed a loyalty towards a brand.
Depending on how long a product/service is likely to be used for, the buyer can ignore some of the steps outlined in section 2.0 (above), or spend a long time evaluating alternatives or even decide not to proceed with any purchase. Clearly, consumer involvement levels will differ.
The lack of planning or evaluation of options when purchasing a certain product is labelled as impulse buying (Hausman, 2000). Supermarkets rely on positioning the products which people would normally buy for everyday use a few isles apart, to tempt individuals to make impulse purchases as they move through the store. Often, these are inexpensive items as higher value impulse buys are more likely to generate post-purchase dissonance which can undermine corporate reputation (Sweeney, Hausknecht, & Soutar, 2000).
High-involvement purchases are usually more risky, complex and more expensive. In such cases, consumers are less likely to have sufficient background information about the purchase prior to identifying that particular need and they would not engage in a routine response. Instead, they engage in a comparison of the offerings of the market, taking into account product specifications, price, support, warranties etc.
The client engages in a more limited problem solving approach, using the knowledge they already have about potential purchases and then building upon it. Customers will spend less time researching the options available and reach a conclusion fairly quickly.
Any new purchase requires distinct effort from the buyer, depending on their existing knowledge and experience in regards to that particular purchase.
Consumers follow the pattern of previous purchases and considers the transaction to be a routine re-order from the same supplier. Businesses therefore need to build and maintain the satisfaction of their customers from the first encounter to ensure that they return. This is particularly important in highly competitive environments, where clients will be targeted by other suppliers with more attractive offers, discounts and other incentives. However, many individuals prefer to maintain the status quo when they have experienced high level of satisfactions, due to the limited effort involved in a straight rebuy.
This is when a similar product is needed, but a change in product specifications or supplier is deemed necessary, potentially due to dissatisfaction with the current product/services or a change in the consumer’s circumstances. For specification changes, consumers usually contact their current supplier with whom they have developed a relationship, to see if they can find a solution and continue to collaborate in order to fulfil these new needs. However, if the customer is dissatisfied they will study competitor offerings to find a better alternative.
Here, the consumer needs to evaluate their requirements, study the available options and make an informed purchase decision when they have no prior experience of the product/service concerned. The need for information is therefore greater, but this also presents an opportunity for companies to increase market share by offering discounts and incentives to new clients.
6.1 ECONOMIC MODEL
This considers how economic factors are particularly relevant when targeting consumers from a lower income group. It is also useful for products or services which are subject to straight routine rebuy decisions, where the consumer focusses on price and any associated discounts likely to increase satisfaction levels. However, this presents a simplistic view which does not adequately consider psychological, social or motivational factors.
Companies allow consumers to explore their learning and information seeking capacities to attract them towards their brand. This model is particularly appropriate for the empowered consumer of the 21st century who has access to extensive information around product specifications and market alternatives etc. Challenging the consumer in this way can build brand reputation and increase subsequent consumer loyalty.
This focuses on consumer personality and motivation, prompting companies to uncover the underlining factors behind purchases to shape marketing and advertising efforts. Such approaches help brands understand how they can develop and improve their products based on the motivation, needs and desires of consumers.
The desire to belong to a group, the social pressure and norms that individuals encounter when they are part of a social group or their role in the society all influence buying behaviours. Market segmentation and consumer profiling allows companies to study buying patterns, providing essential information to support long-term strategic planning.
Studying buyer behaviour is a complex task. Companies need to study their target consumers’ behaviour to know how to respond to their needs and desires, as well as shape these through effective marketing that targets their motivation, cultural, economic and social backgrounds. To enhance brand reputation, companies need to demonstrate and awareness of their buyer’s behaviour through their strategy and tactics. Doing so effectively can increase profitability and improve market positioning.
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