What Is Consumer Behaviour? (With Types And Significance)

By Indeed Editorial Team

Published 5 September 2022

The Indeed Editorial Team comprises a diverse and talented team of writers, researchers and subject matter experts equipped with Indeed's data and insights to deliver useful tips to help guide your career journey.

A marketing campaign's success often depends on the marketer's understanding of consumer behaviour. By studying and understanding consumer behaviour, companies can engage a larger audience besides their current customer base. If you are a marketer, having a better understanding of consumer behaviour can allow you to design and implement effective marketing and promotional campaigns. In this article, we answer the question, 'What is consumer behaviour?', discuss its importance, explain its types, list factors that can influence it and provide tips to understand consumer behaviour effectively.

What Is Consumer Behaviour?

Knowing the answer to 'What is consumer behaviour?" can help you understand why it is crucial to marketing campaigns. Consumer behaviour is the analysis of how people, organisations and groups choose, buy, use and discard products or services to meet their requirements and desires. It also helps identify consumers' actions, underlying motivations, perspectives and emotions, along with the influence of their preferences on their purchasing behaviour.

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Why Is It Important To Analyse Consumer Behaviour?

Here is why it is essential for companies to analyse consumer behaviour:

Differentiating between consumers

Consumer differentiation is a method to distinguish one group of buyers from another. It enables marketers to form a customer target group with identical behaviours. Understanding the differences among each consumer group can help develop distinct marketing strategies or campaigns that fulfil the requirements of diverse consumer groups.

Designing relevant marketing campaigns

Understanding consumer behaviour can assist you in creating influential marketing campaigns as a marketer. Based on your research findings, you can create campaigns that appeal specifically to a consumer group depending on their habits. Understanding what encourages consumers to purchase particular products can make it possible to create advertisements that attract and motivate them to buy the product or services.

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Predicting market trends

A consumer behaviour study can enable businesses to comprehend the purchasing patterns of their buyers. It can be crucial in the production process and help forecast market trend shifts. Understanding how consumer behaviour functions can help allocate company resources to create or market products that generate a profit.

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Identifying competitors

A consumer behaviour analysis assists businesses in comparing their products and services with competitor businesses. A company can develop a better competitive advantage by answering the following questions:

  • Are consumers purchasing from the company's competitors?

  • Why do customers purchase products from them?

  • What qualities of the competitor attract consumers?

  • What differences do consumers identify between the company and competitor products?

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Innovating new products

Companies are generally looking for new ways to increase the likelihood that their products may succeed. A significant source of these concepts is a thorough and thoughtful analysis of consumer behaviour. Brands use their knowledge and findings to update products to reflect the shifting preferences of their clientele.

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Remaining relevant in the market

Staying relevant to the target audience is a major challenge that marketers and brands usually face. Customers can choose to favour one product or brand over another based on factors such as price or quality. Analysing consumer behaviour can help companies comprehend these shifting trends. Businesses can become more adaptable by being aware of current consumer behaviour.

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Enhancing customer service

Customers may react differently to various products and experiences. Companies can cater their services to the customers' unique requirements more effectively by being aware of the divergences within their target audiences. By researching consumer behaviour, they can improve customer service and experience.

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Types Of Consumer Behaviour

Here are four primary consumer behaviour types:

Complex buying

Customers with complex purchasing patterns are more likely to purchase costly, expressive and risky assets. Before making a substantial investment in this kind of transaction, the buyer may extensively research the product. This consumer behaviour is evident when a customer buys a car or real estate.

Dissonance-reducing buying

When consumers engage in dissonance-reducing purchasing behaviour, they actively participate in decision-making but struggle to distinguish between the various brands' offerings. When a customer worry they might regret their decision, dissonance can happen. Before making a purchase, they gather information from multiple sources and compare to evaluate all the available options.

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Habitual buying

This type of consumer behaviour is evident when the product is inexpensive, and the purchase is rare. Consequently, the consumer's interest and investment are less in the product type or brand. In this market, consumers rarely consider complex factors before making a purchase. Instead, they purchase from their choice of company or any other readily available. Instead of brand loyalty, habitual buying practice typically depends on the convention or brand familiarity.

Variety-seeking

When a consumer engages in variety-seeking behaviour, they do not buy additional products because they are unhappy with the results of their previous purchase. Rather, they do so because they simply want more options available. Most of the time, when a consumer switches products or brands, it is out of boredom, interest or a desire to try a different one. Companies can better understand how to classify their consumer type by understanding the types of consumers they attract.

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Factors Influencing Consumer Habits

Here are some of the factors that affect consumer habits and behaviours:

Psychological factors

Human psychology is an intrinsic factor influencing consumer behaviour. According to Maslow's theory of motivation, consumer motivation is one of the most important factors influencing their behaviour. According to this theory, the psychology of consumers affects their requirements. When portrayed as a pyramid, the most basic requirements remain at the base, while the most complex demands stay at the top. These psychological requirements impact the way buyers perceive a brand or product.

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Social factors

Humans are social creatures who live in the company of others and influence each others' lives. It is common for people to imitate others in an effort to create a feeling of belongingness with the people around them. This urge to fit in also impacts their purchase plans. Family members and preference groups are some prominent social factors affecting consumer purchasing behaviour.

Cultural factors

The standards, values and principles of consumers generally influence their doctrine and purchasing decisions. Such influence occurs either unconsciously or consciously and displays in their lifestyle and purchasing decisions. These cultural factors comprise social class, community and subculture.

Personal factors

Besides other factors, personal factors can also have a vital impact on consumer purchasing behaviour. Consumers differ from each other in many ways, which affects their perceptions and buying habits. Age, lifestyle, earnings, location, profession and gender are typical examples of these personal factors.

Economic factors

The market's macroeconomic condition can also influence consumer purchasing behaviour. For instance, when a nation's economy is prospering, the result is an increase in the money supply in the market and a rise in consumer confidence. Similarly, consumers in countries with weaker economies typically possess less purchasing power. Other economic factors include individual income, family income, savings, consumer credit and liquid capital.

Tips To Understand Consumer Behaviour

Here are some valuable tips to help you understand and analyse consumer behaviour:

Develop strong buyer personas

When creating buyer personas, collect data beyond conventional demographics such as age, location and profession. Typical demographics rarely give enough information to help comprehend the intended audience. Instead, you can analyse which type of audience generates the maximum traffic and engagement on the website and then apply this data to your personas to determine how to reach them effectively.

Gather data-driven consumer analytics

Each customer's actions can reveal information about their behaviour. Using tools for tracking user behaviour, you can determine how visitors engage with the company website. With these tools, you can get information regarding the website bounce rate, session duration and additional metrics. These details also help you learn about the target audience's choices and can assist you in creating a more robust and user-friendly website.

Collect feedback for product improvement and innovation

Study the behavioural data to discover which product features customers did not utilise and which ones they found valuable. A profound comprehension of this data can help the product team add relevant features and make favourable updates to existing products. This information can also help the company innovate and develop new products that customers desire.

Follow the customer's buying journey

You can gain insight into the customers' buying journey by trying to comprehend their emotions, motivations and thoughts. You can accomplish this by mapping a customer journey, a pictorial illustration of a customer's engagement with a brand before, during and after the purchase. This can give you a better understanding of various customers and their interactions with different products.

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