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CONSUMER INSIGHTS / MARKET RESEARCH

Consumer Behavior: Definition,

factors and methods

Understanding consumer behavior is a key element of

a marketing strategy. In fact, before implementing a
strategy, it is essential to fully understand the needs
and expectations of the consumers you want to
influence. To do this, you need to understand how the
consumer will react and be influenced by your
marketing strategies.

To delve deeper into the preferences of your target

audience, some of the questions you must answer are:

How do the consumers perceive the

information?

How do you capture their attention?

What are their needs?

What factors influence them to make a

purchase decision? Are they price, quality,
commercial offer, others?

The goal of every entrepreneur is to meet the

demands of its public and market, which will give a
boost to the organization’s sales and customer
satisfaction.

To achieve this goal, an entrepreneur conducts study

and gains insights into the consumer’s behavior who
can be potential buyers. Surveys and research studies
make decision making easier and aid in improving
relationships with customers.

Why is consumer behavior so

important?
Businesses invest a lot of time and resources in their
products and services. Hence, it is absolutely essential
that their offerings cater to the needs of their
customers. Or, they will incur huge amounts of losses.
So, in order to make sure that the products as well as
the brand is well-accepted by the consumers, it is
important to first know what consumers want and are
likely to buy.

1. Better marketing and communications

As the living standards, trends, and technology keeps

changing; consumers’ choices also keep varying.
Understanding how these factors affect customers’
buying habits helps organizations design their
messaging accordingly. Thus, having insights into
consumer behavior can help marketers in meeting
their objectives.

2. Improve customer retention

It is far more beneficial to retain an existing customer

than to gain a new customer. It’s easier to sell new
products and services to your existing customers than
to find new ones.

Entrepreneurs who are able to retain their customers

and create strong relationships, manage to create a
strong brand for their business. A loyal customer can
prove to be a promoter of your business and spread
positive word of mouth. Satisfied customers share
their happy experience with their friends and family.

So, retaining as many customers as possible should

be the goal of entrepreneurs interested in growing
their company.

3. Increase customer loyalty

Understanding customer behavior helps in finding out

ways to boost customer loyalty, which in turn, will lead
to higher sales and a strong brand. Analyzing trends in
sales can aid in offering discounts as well as
suggesting the best products and services to them.

4. Better plan inventory

Researching customer attitudes helps companies plan

inventory and stock raw materials. In case of service
based business, the management team can better
plan their human resources. If businesses see a trend
in demand of specific products, they are likely to send
more purchase orders to their suppliers. The
consumer behavior data can help them to balance
demand and supply.

5. Increase sales

A company always aims to satisfy specific market

niches. Even if the company operates in different
sectors, they should target potential buyers in each
segment. If you know your customers well, you can
have better conversations with a high probability of
closing the deal.

Knowing who you are selling to makes it possible to

clearly define your objectives in the market. Learning
more about the consumer behavior helps to define the
main customers that come directly to the company.
Your inventory should be stocked with the products
that meet requirements of your potential customers.

Instead of taking random shots and trying to sell to

anyone, having knowledge about your customers’ likes
and dislikes helps in making smarter decisions. Such a
strategy has a higher chance of generating sales.

6. Research competition

Studying consumer behavior helps in understanding

the competitive market. You can plan on how to
position your products and services to offer
competitive advantages. Find out answers to
questions like:

Is the customer already using a competitor

brand?

What drives a consumer to buy from your

competitor?

Are potential customers happy with the

competitor brands?

What are the gaps between your products and

that of competitors?

Explore further: Consumer research: Examples,

process and scope

What factors influence consumer

behavior while purchasing?
Consumer behavior is influenced by many factors
such as situation, psychological, environmental and
marketing factors, personal factors, family, and
culture.

Businesses try to collect data so that they can make

decisions on how they can reach their target audience
in the most efficient way. While some influences may
be temporary and others can be long lasting, these
factors can influence a person to buy or not buy. Let’s
now look at some of these factors in detail.

FactorsinfluencingConsumerBehaviour

Situationalfactors Personalfactors

Socialfactors Psychologicalfactors

•QuestionPro

Situational factors: They are temporary in

nature and include physical factors such as a
store’s location, layout, colors, music, lighting,
and even scent. Companies try to make these
factors as favorable as possible. Other
situational factors include holidays, time, and
moods of the consumer.

Personal factors: These factors include

demographic factors such as age, gender,
income, occupation, etc. It also depends on
one’s interests and opinions. To further
understand consumers, companies also look
more closely at their lifestyles – their daily
routine, leisure activities, etc.

Social factors: This factor also includes social

class, level of education, religious and ethnic
background, sexual orientation, and people
around you – family, friends or social network.
Different cultures have varying customs and
rituals that influence how people live their lives
and what products they purchase.

Generally, consumers in the same social class

exhibit similar buying behavior. Most market
researchers believe a person’s family is one of
the biggest determinants of buying behavior.

Psychological factors: A person’s ability to

understand information, perception of needs,
and mindset influence consumer’s behavior.
One’s reaction to a marketing campaign will
depend on one’s beliefs and state of mind.

How to collect data on consumer

behavior?
To understand consumer behavior, you need to know
how consumers think and feel about the different
alternatives available in the market, how they reason
and how they choose between different options.

The motivations that influence consumer behavior are

so broad that the most effective way to study them is
to use different research methods. These methods
should collect both qualitative and quantitative data.
Some of the common data collection methods are:

Customer feedback: Reading comments left

by your customers can highlight recurring
problems or desires.

Question and answer sites: These websites

can give you insight into the questions and
concerns consumers have about your brand,
services or products.

Surveys: Online surveys can be easily

developed and allow you to ask specific
questions.

Focus Groups/Online Panels: Gather a few

customers together to ask them questions on
an ongoing basis, depending of course on your
research needs. Learn here what online panels
are and the advantages of using them.

Online surveys are the most efficient method of

conducting consumer behavior studies. You can
create a survey using a survey software and send it to
your target audience. You can also customize the
survey flow to ask only relevant questions to
respondents.

Online survey software lets you analyze data and

generate reports to make better decisions. You can
also filter data, compare results and identify trends
over time. Based on the results, you can predict
demand and formulate your sales and marketing
strategy. It also helps in designing pricing models and
the maximum amount customers can pay for a specific
bundle of features.

QuestionPro can help you learn more about your

potential customers and conduct research studies. If
you need any help with designing a survey and
collecting data, connect with us. We’d be happy to
help!

Adi Bhat
Global VP - Sales and Marketing at QuestionPro

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