How many times do you make decisions throughout the day? What should I wear today? What perfume should I use? What am I having for lunch?
If you think about it, we make a lot of buying decisions every day without giving them much thought.
These decisions, as insignificant as they may seem, keep marketers up at night. Because decoding the processes behind customer decisions means we can use this information to increase revenue.
What is the meaning of consumer behavior?
Consumer behaviorIt is the study of consumers and the processes they use to choose, use (consume), and dispose of products and services, including consumers' emotional, mental, and behavioral responses.
Consumer behavior incorporates ideas from various sciences, including psychology, biology, chemistry and economics.
In this guide, we'll look at the different aspects and facets of consumer behavior and discuss the most effective types ofcustomer segmentation.
Why is consumer behavior important?
Studying consumer behavior is important because it helps marketers understand what influences consumers' buying decisions.
By understanding how consumers decide on a product, they can bridge the gap in the market and identify needed and obsolete products.
Studying consumer behavior also helps marketers decide how to present their products in a way that makes the most impact on consumers. Understanding consumer buying behavior is the key to reaching and engaging your customers and converting them to buy from you.
An analysis of consumer behavior should reveal:
- What consumers think and how they feel about various alternatives (brands, products, etc.);
- What influences consumers to choose between various options;
- Consumer behavior in research and purchase;
- How consumers' environment (friends, family, media, etc.) influences their behavior.
Consumer behavior is often influenced by many factors. Marketers must study consumer buying patterns and discover buyer trends.
In most cases, brands influence consumer behavior only with the things they can control; think about how IKEA seems to force you to spend more than you intended every time you walk into the store.
So what are the factors that influence consumers to say yes? There are three categories of factors that influence consumer behavior:
- Personal Factors: An individual's interests and opinions may be influenced by demographics (age, gender,culture, etc).
- Psychological Factors: An individual's response to a marketing message will depend on their perceptions and attitudes.
- Social factors: family, friends, education, social networks, income, all influence consumer behavior.
Types of consumer behavior.
There are four main types of consumer behavior:
1. Complex buying behavior
This type of behavior is found when consumers purchase an expensive product that is purchased infrequently. They are heavily involved in the buying process and consumer research before committing to a high-value investment. Imagine buying a house or a car; these are an example of complex buying behavior.
2. Buying behavior that reduces dissonance
The consumer is highly involved in the buying process, but has difficulty identifying differences between brands. “Dissonance” can occur when the consumer fears he will regret his choice.
Imagine that you are buying a lawn mower. You'll choose one based on price and convenience, but after you buy it, you'll be looking for confirmation that you made the right choice.
3. Usual buying behavior
Habitual purchases are characterized by the consumer having very little involvement with the product category or brand. Imagine going shopping: you go to the store and buy your favorite type of bread. You are displaying a habitual pattern, not strong brand loyalty.
4. Variety seeking behavior
In this situation, the consumer buys a different product not because he is dissatisfied with the old one, but because he is looking for variety. Like when you're experimenting with new shower gel scents.
Knowing what types of customers your online store attracts will give you a better idea abouthow to segment types of customers.
What affects consumer behavior?
Many things can affect consumer behavior, but the most frequent factors influencing consumer behavior are:
1. Marketing campaigns
Marketing campaigns greatly influence purchasing decisions. If done well and regularly, with the right marketing message, it can even persuade consumers to switch brands or to more expensive alternatives.
Marketing campaigns such asFacebook Ads for Ecommerce, they can even be used as reminders of products/services that need to be purchased regularly, but are not necessarily on the minds of customers (like insurance, for example). A good marketing message can influence impulse purchases.
2. Economic conditions
Especially for expensive products (such as houses or cars), economic conditions play an important role. A positive economic environment is known to make consumers more confident and willing to make purchases, regardless of their financial responsibilities.
The consumer's decision-making process is longer for expensive purchases and can be influenced by more personal factors at the same time.
3. Personal Preferences
Consumer behavior can also be influenced by personal factors: likes, dislikes, priorities, morals and values. In industries like fashion or food, personal opinions are especially powerful.
Ads can influence behavior, of course, but at the end of the day, consumer choices are highly influenced by their preferences. If you're vegan, no matter how many hamburger ads you see, you're not going to start eating meat because of it.
4. Group influence
Peer pressure also influences consumer behavior. What our family members, classmates, immediate relatives, neighbors and acquaintances think or do can play an important role in our decisions.
Social psychology impacts consumer behavior. Opting for fast food over homemade meals, for example, is just one of those situations. Education levels and social factors can have an impact.
5. Purchasing power
Last but not least, our purchasing power plays an important role in influencing our behavior. Unless you're a billionaire, consider your budget before making a purchase decision.
The product might be great, the marketing might be up to par, but if you can't afford it, you won't buy it.
Targeting consumers based on their purchasing power will help marketers determine qualified consumers and get better results.
Discover advanced consumer behavior tactics
Customer behavior patterns
Buying behavior patterns are not synonymous with buying habits. Habits develop as action tendencies and become spontaneous over time, while patterns show a predictable mental blueprint.
Each customer has their unique buying habits, while buying behavior patterns are collective and offer marketers a unique characterization. Customer behavior patterns can be grouped into:
1. Place of purchase
Most of the time, customers split their purchases between multiple stores, even if all items are available at the same store. Think of your favorite hypermarket: although you'll also find clothes and shoes there, you'll probably buy them from real clothing brands.
When a customer has the ability and access to purchase the same products at different stores, he is not permanently loyal to any store unless it is the only store he has access to. Studying customer behavior in terms of location choice will help marketers identify key store locations.
2. Purchased Items
Analyzing a shopping cart can provide marketers with many consumer insights into which items were purchased and how much of each item was purchased. Basic items can be purchased in bulk, while luxury items are purchased less frequently and in small quantities.
The quantity of each item purchased is influenced by the perishability of the item, the purchasing power of the buyer, the unit of sale, the price, the number of consumers for whom the item is intended, etc.
3. Purchase time and frequency
Customers will shop at their convenience and expect service even during the oddest of hours; especially now in the age of e-commerce where everything is just a few clicks away.
It is up to the store to meet these demands, identifying a purchase pattern and adapting its service according to the time and frequency of purchases.
One thing to keep in mind: seasonal variations and regional differences must also be taken into account.
4. Form of purchase
A customer can walk into a store and purchase an item, or place an order online and pay online with a credit card or cash on delivery.
The purchase method may also result in more expenses for the customer (for online purchases, a shipping fee may also be charged, for example).
How a customer chooses to purchase an item also says a lot about the type of customer they are. Gathering information about their behavior patterns helps identify new ways to get customers to come back, more often and at higher prices.
Think of all the data you've collected about your customers. Buying patterns are hidden in your online store reviews, and you can manually search for information or integrate a tool into your e-commerce platform such as Shopify ou WooCommerceto obtain automated information about patterns of behavior.
Customer behavior segmentation
Segmenting customers and identifying types of buyers has always been important. Now that the customization andcustomer experienceare factors that determine the success of a business, effective segmentation is even more important.
Only 33% of companies that use customer segmentation say they find it significantly impactful, so it's important to find the segmentation technique that gives clarity and fits your business.
Traditionally, most marketers have used six main types of behavioral targeting.
1. Benefits sought
A customer buying toothpaste might search for four different reasons: whitening, sensitive teeth, taste, or price.
When customers search for a product or service, their behavior can reveal valuable information about which benefits, features, values, use cases, or issues are the most motivating factors influencing their purchase decision.
When a customer places a much higher value on one or more benefits than others, those top benefits sought are the motivating factors that shape that customer's purchase decision.
2. Based on occasion or time
Occasion-based and time-based behavior segments refer to both universal and personal occasions.
- Universal occasions apply to most customers or target audiences. For example, holidays and seasonal events, when consumers are more likely to make certain purchases.
- Recurring personal occasions are buying patterns for an individual customer that repeat consistently over time. For example birthdays, anniversaries or holidays, monthly shopping or even daily rituals like stopping for coffee on the way to work each morning.
- Non-personal occasions are also related to individual customers, but they are more irregular and spontaneous and therefore more difficult to predict. For example, going to a friend's wedding.
3. Usage fee
Product or service usage is another common way to segment customers by behavior, based on how often a customer purchases or interacts with a product or service. Usage behavior can be a strong predictive indicator ofloyaltyodrumsand thereforelifetime value.
4. Brand loyalty status
Loyal customers are a company's most valuable assets. They are cheaper to maintain, usually havehigher lifetime valueand they can become brand advocates.
By analyzing behavioral data, customers can be segmented by their level of loyalty so marketers can understand their needs and ensure they are met.
Loyal customers are those who should receive special treatment and privileges, such as exclusive rewards programs to nurture and strengthen customer relationships and encourage future business continuity.
5. User status
There are many different possible user states that you can have depending on your business. Some examples are:
- first-time buyers
- regular users
- Defectors (former customers who switched to a competitor).
6. Stage of the customer journey
Audience-based targeting in Buyer Readiness enables marketers to align communications and personalize experiences to increaseconversionat each step.
In addition, it helps them discover the stages where customers are not progressing, so they can identify the biggest obstacles and opportunities for improvement, including in post-purchase behaviors.
In addition to these traditional forms, another type of segmentation isRFM model🇧🇷 This approach is popular with ecommerce marketers because it helps them build customer experiences based on the insights they have about each customer segment.
RFM is a behavioral targeting model and the three letters stand for Recency, Frequency, and Monetary Value.
This is what these variables show:
- Recency = how long ago a customer last ordered on your site;
- Frequency = how many times a customer bought something from your site in the analyzed period;
- Monetary value = how much each customer has spent on your site since their first order.
LosRFM model analysisIt can be executed in 2 ways:
- Manually: export your database in a spreadsheet and analyze your customers following the rules ofRFM analysis;
- Automatically – through certain tools that arecreating RFM dashboards.
Segmentation and RFM analysis can reveal whoyour most loyal and profitable customersare and also:
- Reveal which brands and products are dragging your business down;
- Create personalized recommendations for your customers;
- solve rightcustomer experienceproblems.
Before you make gut decisions about your customers and audience, observe their behavior, listen to them, and build a relationship that will keep them loyal no matter how aggressive your competitors are.
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What do you understand by consumer behavior?
Consumer behavior is the study of how people make purchasing decisions to satisfy their needs, wants, or desires, and how their emotional, mental, and behavioral responses influence the purchase decision. To analyze consumer behavior, people use concepts and ideas from different areas, such as psychology, economics, biology and chemistry.
What are the 4 types of customer buying behavior?
There are four types of consumer behavior: Habitual Buying Behavior, Variety Seeking Behavior, Dissonance Reduction Buying Behavior, and Complex Buying Behavior. Types of consumer behavior are determined by the type of product the consumer needs, the level of participation, and differences between brands.
What is an example of consumer behavior?
Consider planning a city break for two as an example of consumer behavior. For someone just starting out, it might be extensive decision making, but for a couple who have spent more than 5 years together, it might be limited decision making. Another example of consumer behavior can be seen when making a reservation at a restaurant. A night out with friends requires a limited time investment, while booking for a birthday or a proposal is a more complex decision-making process.
How to identify consumer behavior?
A consumer behavior analysis helps you identify how your customers make decisions about a product or service. To study their behavior, you need a mixture of qualitative and quantitative data from customer surveys, customer interviews, information gathered by observing their behavior in store and online.
What are the characteristics of consumer behavior?
There are four factors that determine the characteristics of consumer behavior: personal, psychological, social and cultural. All factors have a major impact on consumer behavior, and the characteristics that define a customer change as their lives change.
What are the 4 types of consumer behavior? ›
There are four types of consumer behavior: habitual buying behavior, variety-seeking behavior, dissonance-reducing buying behavior, complex buying behavior.What is consumer behaviour segmentation? ›
Behavioral Segmentation is a form of customer segmentation that is based on patterns of behavior displayed by customers as they interact with a company/brand or make a purchasing decision.What are the 4 types of consumers in marketing? ›
primary consumers, secondary consumers, tertiary consumers or apex consumers are the different types of consumers.What are the 4 factors that influence consumer behavior? ›
In general, there are four factors that influence consumer behaviour. These factors impact whether or not your target customer buys your product. They are cultural, social, personal and psychological.What are the 5 steps of consumer behavior? ›
This is the process by which consumers evaluate making a purchasing decision. The 5 steps are problem recognition, information search, alternatives evaluation, purchase decision and post-purchase evaluation.What are the 5 consumer types? ›
- Loyal Customers. Loyal customers make up the bedrock of any business. ...
- Impulse Shoppers. Impulse shoppers are those simply browsing products and services with no specific purchasing goal in place. ...
- Bargain Hunters. ...
- Wandering Consumers. ...
- Need-Based Customers.
Demographic, psychographic, behavioral and geographic segmentation are considered the four main types of market segmentation, but there are also many other strategies you can use, including numerous variations on the four main types. Here are several more methods you may want to look into.What are the types of consumer segments? ›
- Demographic. At a bare minimum, many companies identify gender to create and deliver content based on that customer segment. ...
- Recency, frequency, monetary (RFM) ...
- High-value customer (HVCs) ...
- Customer status. ...
- Behavioral. ...
Segmentation is the process of dividing a company's target market into groups of potential customers with similar needs and behaviours. Doing so helps the company sell to each customer group using distinct strategies tailored to their needs.What are the 7 kinds of consumer? ›
Euromonitor's Survey team developed seven global consumer types from the survey data: the Undaunted Striver, Impulsive Spender, Balanced Optimist, Aspiring Struggler, Conservative Homebody, Independent Skeptic and Secure Traditionalist.
What are the 4 steps in the basic consumer process? ›
- Stage 1: Problem Recognition.
- Stage 2: Information Gathering.
- Stage 3: Evaluating Solutions.
- Stage 4: Purchase Phase.
- Stage 5: The Post-Purchase Phase.
Consumers spend time carrying out research and comparing multiple products. They check product ratings and also ask friends or sales professionals. The process takes longer to complete. For example, when buying a TV, people spend a long time going to different shops and comparing products.What are the 5 factors most affecting consumer behavior? ›
- Psychological Factors.
- Social Factors.
- Cultural Factors.
- Economic Factors.
- Personal Factors.
Understanding consumer behaviour is important for businesses because it can help them to make better decisions about their products and services. By understanding why people purchase certain products and how they use them, businesses can adapt their offerings to better suit the needs and wants of their target market.Which is the most important factor in consumer behavior? ›
Perception. Consumer perception is a major factor that influences consumer behavior. Customer perception is a process where a customer collects information about a product and interprets the information to make a meaningful image of a particular product.What are the 3 types of consumer decision making behaviour? ›
The three types are nominal decision making, which requires little to no search for alternatives; limited decision making, which requires some but not much of a search for alternatives; and extended decision making, which requires extensive evaluation of alternatives and post-purchase evaluation.How many stages are there in consumer Behaviour? ›
The consumer typically passes through five stages before he purchases: problem recognition, information search, evaluation of alternatives, purchase decision, and post purchase behaviour.Who is a consumer 5 points? ›
The person who pays and purchases a product is called a consumer.What are 10 types of consumers? ›
- Disinterested. They don't want what you are providing. ...
- Detached. You won these customers, but they lack loyalty. ...
- Delighted. ...
- Devoted. ...
- Disappointed. ...
- Disaffected. ...
- Dormant. ...
- Diligent searchers. According to the survey, these individuals take everything into account, valuing all product and brand characteristics.
- Product selectors. These folks focus on the. ...
- Pleasure shoppers. ...
- Foodies. ...
- Unbiased buyers. ...
- Indifferent consumers.
What are the 5 main market segments? ›
- Behavioral Segmentation.
- Psychographic Segmentation.
- Demographic Segmentation.
- Geographic Segmentation.
- Firmographic Segmentation.
Five ways to segment markets include demographic, psychographic, behavioral, geographic, and firmographic segmentation.What is segment and its types? ›
There are four main customer segmentation models that should form the focus of any marketing plan. For example, the four types of segmentation are Demographic, Psychographic Geographic, and Behavioral. These are common examples of how businesses can segment their market by gender, age, lifestyle etc.What is the importance of market segmentation? ›
The importance of market segmentation is that it allows a business to precisely reach a consumer with specific needs and wants. In the long run, this benefits the company because they are able to use their corporate resources more effectively and make better strategic marketing decisions.What is market segmentation with example? ›
Common characteristics of a market segment include interests, lifestyle, age, gender, etc. Common examples of market segmentation include geographic, demographic, psychographic, and behavioral.What is segmentation strategy? ›
A marketing segmentation strategy helps determine which customers you can build relationships with, how to group them, and what marketing actions to take to best reach your target market. Creating a customized experience catered to customers lead to higher customer retention rates and more focused marketing campaigns.How can segmentation be used? ›
Segmentation offers a simple way of organizing and managing your company's relationships with your customers. This process also makes it easy to tailor and personalize your marketing, service, and sales efforts to the needs of specific groups. This helps boost customer loyalty and conversions.What is the full meaning of segment? ›
A segment of something is one part of it, considered separately from the rest.What are the 8 basic needs of consumer? ›
This is your right to have access to basic and essential goods and services, such as adequate food, clothing, shelter, health care, education, public utilities, water, and sanitation.What are the six steps of the consumer behavior process? ›
- Stage #1: Problem Recognition. ...
- Stage #2: Information Search. ...
- Stage #3: Evaluation of Alternatives. ...
- Stage #4: Purchase Decision. ...
- Stage #5: Purchase. ...
- Stage #6: Post-Purchase Evaluation.
What are the six steps in consumer analysis? ›
The 6 steps in the marketing process
- Identify the opportunity. ...
- Develop a research plan. ...
- Collect the data. ...
- Analyze your data. ...
- Present your results. ...
- Incorporate your findings.
Consumer behavior refers to the acquisition, consumption, and disposal of products, services, time, and ideas by decision-making units. This behavior is pervasive, involving choices made by virtually all human beings in all societies and cultures.What are the characteristics of consumer behaviour? ›
- Need identification to buy the product .
- Information search relating to the product.
- Listing of alternative brands.
- Evaluating the alternative (cost-benefit analysis)
- Purchase decision.
- Post-purchase evaluation by the marketer.
Consumer behavior is the study of what influences individuals and organizations to purchase certain products and support certain brands. The six universal principles of persuasion are reciprocity, commitment, pack mentality, authority, liking and scarcity.What are the consumer behaviour models? ›
A consumer behavior model is a theoretical framework for explaining why and how customers make purchasing decisions. The goal of consumer behavior models is to outline a predictable map of customer decisions up until conversion, thus helping you steer every stage of the buyer's journey.What are the 3 types of factors affecting behavior? ›
- physical factors - age, health, illness, pain, influence of a substance or medication.
- personal and emotional factors - personality, beliefs, expectations, emotions, mental health.
- life experiences - family, culture, friends, life events.
- what the person needs and wants.
Consumer behavior helps organizations decide what products and services to manufacture or offer. When they know what customers buy and how they go about buying those products, organizations can more easily spot a need that has not yet been satisfied.How do we study consumer behaviour? ›
- Do a consumer behavioural analysis. ...
- Use social listening to track consumer buying behaviour. ...
- Get advanced audience insights. ...
- Apply data from one marketing channel to another.
Quaternary consumers are predators who eat a lot of prey but are usually not preyed upon themselves. They are the apex predators at the top of the food chain.What are the four 4 buying process and behavior? ›
The four types of buying behaviour are: i) Complex buying behaviour, ii) Dissonance Reducing Buying Behaviour, iii) Habitual Buying Behaviour, and iv) Variety Seeking Buying Behaviour.
What are the 3 types of consumer decision-making behaviour? ›
The three types are nominal decision making, which requires little to no search for alternatives; limited decision making, which requires some but not much of a search for alternatives; and extended decision making, which requires extensive evaluation of alternatives and post-purchase evaluation.How many stages are there in consumer behaviour? ›
The consumer typically passes through five stages before he purchases: problem recognition, information search, evaluation of alternatives, purchase decision, and post purchase behaviour.What is a 1st order consumer? ›
The first order consumers or primary consumers are always herbivores since they feed on the producers directly. Autotrophs are organisms that produce food using nutrients from the soil and sunlight and are also called producers.What is the 5th consumer called? ›
The organisms that prey on and eat tertiary consumers are called quaternary consumers. These are on the fifth trophic level in a food chain. These organisms are often the top predators, or apex predators, in the ecosystem.What are 1st level consumers? ›
This level is made up of herbivores: bacteria, fungi, actinomycetes, nematodes, mites, snails, slugs, earthworms, millipedes, sowbugs and worms. Note that some types of mites are carnivores.What are the 6 stages of consumer buying behavior? ›
- Stage #1: Problem Recognition. ...
- Stage #2: Information Search. ...
- Stage #3: Evaluation of Alternatives. ...
- Stage #4: Purchase Decision. ...
- Stage #5: Purchase. ...
- Stage #6: Post-Purchase Evaluation.
Consumer behavior is the study of individuals, groups, or organizations and all the activities associated with the purchase, use and disposal of goods and services. Consumer behaviour consists of how the consumer's emotions, attitudes, and preferences affect buying behaviour.