Consumer Behavior

Consumer behavior refers to the actions consumers do while choosing, buying, and using certain products. Analyzing consumer behavior helps businesses understand the target audience’s buying habits and offer more appealing products.

In the article, we explain why studying consumers’ behavior is important and how to do it, provide factors that influence buying behavior and highlight its main types.

Why is it important to understand consumer behavior?

Studying consumer behavior is one of the first steps when companies start working with new audiences. Discover why it is important to study people’s buying preferences and decisions.

1. It allows you to provide personalized experiences. According to Stackla, 70 percent of people think personalization is vital. If you want to stand out from the competitors on the market, it is necessary to study consumers’ buying preferences and habits. Providing personalized experiences can help you increase customer loyalty because people will be more satisfied with your products and services.
2. It can help you increase customer retention. Invesp states that it is five times cheaper to retain an existing client than attract a new one. However, according to Accenture, 41% of customers switched companies last year because of poor personalization. Study consumers’ behavior to provide more personalized experiences and increase clients’ retention.
3. It allows you to improve your product management. Understanding tendencies in people’s behavior lets you predict what products will be successful among a certain audience. Discover what goods clients want to buy and what service they want to get to build a highly-competitive strategy and improve your products before the launch. Moreover, you can plan the approximate amount of material needed to balance the supply and demand of a new product.
4. It shows new ways of product marketing. Studying customer behavior gives you a deep understanding of how your clients make choices. You can discover their pains, needs, and interests to use this data in future marketing campaigns. Create content to deliver strong messages and attract more customers. Use consumers’ behavior knowledge for upselling and cross-selling.
5. It helps increase sales by focusing on the target customers. Understanding the peculiarities of your clients’ behavior allows you to develop competitive advantages. It will help you save money on marketing and generate more sales. Moreover, customer lifetime value may increase too, because clients will be satisfied with their experiences, and most of them may become regular ones.

Now you understand why analyzing customer behavior is so important. Although, it might seem difficult, many factors influence people’s actions. In the next section, we provide the top 5 most important ones you should concentrate on while studying the behavior of your clients.

5 Factors Influencing Consumer Behavior

Many factors influence people’s buying choices. Some are temporary, such as emotional state, and some are permanent, such as gender. Below we provide 5 main groups of factors that affect customer choices.

1. Personal factors. Marketers always consider these points while creating a buyer persona. Firstly, take a look at the target audience’s demographics (age, gender, location, etc.). Then describe the lifestyle of your potential clients to understand their behavior better. By studying consumers’ way of living, companies identify customers’ pains, needs, and preferences. Occupation is also an important personal factor because people tend to spend more on products connected with their profession.
2. Social factors. Family and friends affect consumers’ buying behavior the most because they form our lifestyle, preferences, and values. Social status also influences the way we buy. It is remarkable that consumers of the same social class tend to have similar buying habits. Cultural background is one more important point because our community influences our values significantly. Also, social factors include the level of education, religion, sexual orientation, current trends, etc.
3. Psychological factors. These are the most difficult to predict because they depend on the human’s personality. They include mindset, the way a consumer perceives information, individual response, etc. Motivation primarily influences a person's behavior: the higher motivation, the higher chances for a customer to buy a certain product. One more important factor is perception. It shapes while the consumer gathers information, chooses, and uses goods. Perception may be positive and negative. Loyal customers have a stable positive perception of a product and the whole company. Marketing campaigns can influence people’s perceptions and persuade them to try new goods and spend more money.
4. Economic factors. The cost of the product in comparison with customers’ income influences their choices greatly. The higher your clients’ income, the easier it is for them to make decisions and spend money on goods. The economy of the whole country also influences customers’ buying behavior. People who live in prosperous countries tend to spend more money on inessential items because their basic needs are covered. The amount of savings is also important, especially for expensive purchases, such as cars or houses, and influences buyers’ behavior directly. To achieve better results, marketers segment target audience groups by their income and suggest the best solution according to each group’s preferences.
5. Situational factors. The purchase situation may play an essential role in the person’s behavior. Companies try to suggest the most comfortable conditions, such as location, lighting, music, and service to persuade consumers to buy their products. However, there are some situational factors we can not influence, such as the client’s mood time, day of the week, or season when the person is making a choice.

With these factors in mind, it will be easier for you to predict consumer behavior. In the next section, we describe the main types of consumer behavior, provide their peculiarities and explain how to use them in your product promotion.

Types of Consumer Behavior

Marketers differentiate types of consumer behavior to identify the main patterns in their clients' actions. Below we provide the main differences in people’s buying behavior and explain how to deal with clients of every type.

1. Habitual behavior

This is the most widespread type that we deal with when buying something daily. Such purchases are part of our routine, requiring little involvement and thought. For example, when you choose a chocolate bar in the supermarket. You do not need to think for a long time before purchasing; you just take your favorite one.

To influence people’s habitual behavior, you need to promote your product actively. Brand familiarity is one of the main points in the choice, and this is why well-known and popular companies always win the competition when the person buys something habitually. On the other hand, brand loyalty does not play an important role in this type of decision-making.

2. Variety-seeking behavior

This type is completely different from the previous one. When people seek variety, they buy something completely different from the product they used to choose, even if they were satisfied with it. For instance, you used to buy mozzarella, but decided to purchase feta or cheddar just to try them.

Variety-seeking behavior often involves brand switching and it is ok. To reduce consumer churn you need to create a diverse product line and highlight the differences between your products. Improve your products and promote the changes to make people try them again and again.

3. Complex behavior

We behave in such a way when buying expensive products that are difficult to choose. Such a purchase takes a long time decide. Consumers often research and analyze the pros and cons of many product alternatives to make the best decision. They can also ask their family and friends for advice. An example of such behavior can be purchasing a car because it is a long-term investment.

To persuade people to buy expensive products from your company, you should give them a deep understanding of all the benefits. Highlight advantages on your website and on social media, and focus on them in paid promotions. Do your best to make clients buy your products again and again.

4. Dissonance-reducing behavior

This type is similar to the previous one but occurs when there is little difference between the products. It is always difficult to choose for the consumers; they worry that they will regret the wrong purchase. For example, you want to buy an expensive diamond ring, and some of them are almost similar, so you want to reduce dissonance and buy the best one.

Marketers suggest not only focusing on your products’ advantages but highlighting its unique features. Brand popularity is also very important because people tend to choose a familiar product from a wide range of similar ones.

5. Impulsive behavior

While making impulsive purchases, consumers often take little time to choose and focus on the quality of the product, but not on its cost. For example, when you go to the department store to buy a coat and decide to take a new pair of shoes because they suit well. Such purchases are focused on the emotional state of the buyer.

To increase the number of impulsive purchases of your products, we recommend using emotional marketing. Develop a reputation of a friendly brand and build strong relations with your clients. Every marketing message should call on certain emotions and highlight consumers’ pains and needs. Make the time needed to purchase your products as short as possible.

6. Average spending behavior

This type is characterized by deep research before the purchase. Consumers want to buy high-quality products, but they are not ready to buy the most expensive ones and seek the best price-quality ratio. Typically, people set an estimated budget for such purchases, but consumers can spend more if they feel that the product is worth it. For instance, you want to buy a winter jacket and are ready to pay 400$ for it. However, you can even pay 600$ for a jacket if it is super-warm and very stylish.

Marketers recommend placing reviews of existing clients and success statistics to persuade customers to pay more. It may be a good idea to create a product line with goods of different prices to offer people to choose the variant with the best price-quality ratio.

7. Economical behavior

Some people are not focused on the quality of the products and try to choose the cheapest variants. We can often behave in such a way when the difference between products is almost unimportant. For example, you can buy cheaper plates if you like their design.

Brand reputation and brand loyalty do not play a role in this choice. To persuade people with economical behavior to buy your products, you need to provide cheap but high-quality products with few features.

Now you know the main peculiarities of each type of consumer behavior and are ready to use this knowledge in marketing. However, a thorough analysis of your client's actions is needed before developing a strong strategy. We highlight the main steps and explain how to analyze the behavior of your customers in the next section.

How to analyze consumer behavior?

Consumer behavior analysis is necessary for companies that want to grow and succeed in the market. Conducting research on clients’ behavior might seem complicated for some business owners, but it is not so. Read our pieces of advice in this section, turn them into practice and attract more clients to your brand.

1. Collect analytics and gather quantitative data

The first step in analyzing consumer behavior is to gather as much information as possible. Check analytics of your social media accounts and a website, gather statistics about offline sales, and check quantitative data from your previous marketing campaigns. You will need such metrics as revenue, adoption rate, LTV, CAC, retention rate, churn rate, average deal size, close size, etc.

Collect as much information as possible, and discover the data within the whole sphere. You will be able to compare your brand's statistics with your competitors’ stats to get a more holistic image.

2. Conduct interviews and collect qualitative data

The next step is communication with your existing clients and people who represent your buyer personas. You can conduct in-depth research, using different polls and open-ended questions. Collect your clients’ demographics, and ask them about their preferences, needs, and pains. Focus on people’s buying decisions and ask them what things influence their choices. We provide some questions you can ask below.

• What do consumers think of your brands’ and your competitors’ products?
• How do they choose from different alternatives?
• What are the essential features of your product for them?
• What influences their buying decisions the most? (price, quality, service, etc.)
• Do they ask their friends and family for advice before the purchase?

You can also add specific questions focused on your niche, people’s pains, and needs. Then collect all the questions and analyze them. Identify common trends and differences and go on to the next step.

3. Segment your audience and find common trends for each segment

Once you gather all the information, it is time to analyze it. Identify a few groups within your target audience and highlight their differences. Then describe the way representatives of each segment of your target audience behave. It might be a good idea to distinguish the most valuable customers into a separate group and think about what they have in common.

Use both qualitative and quantitative information to identify the behavioral trends in the groups. Then take a look at your customer journey and think about roadblocks representatives of each segment may have before the purchase. Highlight the most problematic steps and describe the ways to improve them.

4. Develop a strategy and make it work

Now you understand your customers’ behavior, and it is time to think about future improvements. Optimize your product, services, marketing messages, and content. Remember about the specific needs of all segments of your target audience and develop different approaches to these groups. It will help your company grow without loss in quality and overspending. Then build a strong strategy and make these changes work.

One more important thing is to stay relevant. Analyze the results of the changes from time to time and make improvements. If you want your company to grow and develop, consumer behavior studying should be a continuous process. Trends are changing so you should keep in touch and be flexible.

Congrats, now you know what customer behavior is and why it is important, the types of people’s buying behavior, and the factors that influence it. You can also analyze consumer behavior and improve your business according to the results of this analysis.

Last Updated: 22.03.2023