How many times do you make decisions throughout the day? What should I wear today? What perfume should I wear? What am I going to have 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 awake. Because decoding the processes behind customer decisions means we can use that 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' purchasing decisions.
By understanding how consumers decide on a product, they can close the gap in the market and identify obsolete and needed products.
Studying consumer behavior also helps marketers decide how to present their products in a way that will have maximum impact on consumers. Understanding consumer buying behavior is the key to reaching and engaging your customers and converting them to buy from you.
A consumer behavior analysis 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 during search 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: A person's interests and opinions can 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 level, 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 buy an expensive and infrequent product. They are heavily involved in the buying process and research consumers 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 purchase process, but has difficulty identifying the differences between brands. "Dissonance" can occur when the consumer fears that they will regret their choice.
Imagine that you are buying a lawn mower. You'll choose based on price and convenience, but after the purchase, you'll be looking for confirmation that you made the right choice.
3. Habitual buying behavior
Habitual purchases are characterized by the fact that the consumer has very little involvement with the category or brand of the product. Imagine shopping at the supermarket: you go to the store and buy the type of bread you prefer. You're showing a habitual pattern, not strong brand loyalty.
4. Variety seeking behavior
In this situation, the consumer buys a different product not because he is not satisfied with the previous 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 that influence consumer behavior are:
1. Marketing campaigns
Marketing campaigns greatly influence purchasing decisions. Done correctly and regularly, with the right marketing message, they can even persuade consumers to switch brands or switch to more expensive alternatives.
Marketing campaigns likeFacebook Ads for Ecommerce, it can even be used as a reminder of products/services that need to be purchased regularly but are not necessarily on the minds of customers (such as 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 feel more secure and willing to make purchases, regardless of their financial obligations.
The consumer decision-making process is longer for expensive purchases and may 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, of course, influence behavior, but at the end of the day, consumer choices are heavily influenced by their preferences. If you're a vegan, no matter how many restaurant 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. Choosing fast food over home-cooked 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, you'll consider your budget before making a purchase decision.
The product may be great, the marketing may be adequate, but if you can't afford it, you won't buy it.
Segmenting 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, whereas patterns show a predictable mental design.
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 among multiple stores, even if all the items are available in the same store. Think about your favorite hypermarket: although you can find clothes and shoes there too, you are probably buying clothes from real brands.
When a customer has the ability and access to buy the same products at different stores, they are not permanently loyal to any one store unless it is the only store they have access to. Studying customer behavior in terms of location choice will help marketers identify key storage locations.
2. Items purchased
Analyzing a shopping cart can provide marketers with a wealth of information about which items were purchased and how much of each item was purchased. Staple 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. Time and frequency of purchase
Customers will shop according to their feasibility and expect service even at the most unusual hours; especially now in the age of eCommerce 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 considered.
4. Purchase method
A customer can walk into a store and buy an item right there, or order online and pay online with a credit card or cash on delivery.
The purchase method may also induce higher customer spending (for online purchases, a shipping fee may also be charged, for example).
The way 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 keep customers coming back to buy, more often and at higher prices.
Think about all the data you've collected about your customers. Buying patterns are hidden in your online store reviews and you can search for information manually or integrate a tool into your ecommerce platform like Shopify o WooCommerceto obtain automated information about behavior patterns.
Customer behavior segmentation
Segmenting customers and identifying types of buyers has always been important. Now that 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 provides clarity and fits your business.
Traditionally, most marketers have used six main types of behavioral targeting.
1. Benefits sought
A customer buying toothpaste may look 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, these primary sought-after benefits are the motivating factors that shape that customer's buying decision.
2. Depending on the occasion or the weather
The occasion and time based behavioral segments refer to both universal and personal occasions.
- Universal occasions apply to the majority of 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 are constantly repeated over time. For example, birthdays, anniversaries or holidays, monthly purchases or even daily rituals like stopping for a cup of coffee on the way to work every morning.
- Rare personal occasions are also related to individual clients, 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 ofloyaltyotakeand therefore,lifetime value.
4. Brand loyalty status
Loyal customers are a company's most valuable assets. They are cheaper to maintain, usually havehighest lifetime valueand they can become advocates for the brand.
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 statuses that you can have, depending on your business. Some examples are:
- not users
- first time buyers
- regular users
- Defectors (former customers who switched to a competitor).
6. Stage of the customer journey
Audience-based segmentation in buyer readiness enables marketers to align communications and personalize experiences to increaseconversionat every step.
Plus, it helps them discover steps where customers aren't progressing so they can identify the biggest roadblocks 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 among eCommerce marketers because it helps them create customer experiences based on the insights they have about each customer segment.
RFM is a behavioral segmentation model and the three letters stand for Recency, Frequency, and Monetary Value.
This is what these variables display:
- Recency = how long ago a customer last ordered from your site;
- Frequency = how many times a customer bought something on your site in the analyzed period;
- Monetary value = how much each customer has spent on your site since their first order.
oRFM 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 arecreation of RFM dashboards.
Segmentation and RFM analysis can reveal whoyour most loyal and profitable customersare and also:
- Reveal which brands and products are hurting your business;
- Create personalized recommendations for your clients;
- solve wellCustomer experienceproblems.
Before making intuition-based decisions about your customers and your audience, observe their behavior, listen to them, and build a loyal relationship, 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 various fields, 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-reducing buying behavior, and complex buying behavior. The types of consumer behavior are determined by the type of product the consumer needs, the level of involvement and the 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 who has just started dating, it can be extensive decision-making, but for a couple who have spent more than 5 years together, it can be limited decision-making. Another example of consumer behavior can be seen when making a reservation at a restaurant. For a night out with friends, it requires a limited time investment, while booking for a birthday or a marriage proposal is a more complex decision-making.
How do you 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 mix 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.
Experts agree that there are four main types of consumer behavior: complex-buying behavior, dissonance-reducing buying behavior, habitual buying behavior, and variety-seeking buying behavior.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 customer behavior patterns? ›
Customer behavior refers to an individual's buying habits, including social trends, frequency patterns, and background factors influencing their decision to buy something. Businesses study customer behavior to understand their target audience and create more-enticing products and service offers.What is segmentation in consumer behaviour? ›
It attempts to understand the buyer decision making process both individually & in groups. It studies the individual consumers such as demographics & behavioural aspects to understand the people's wants. It is a process where consumer decide what to buy, when to buy, how to buy, where to buy & how much to buy.What are the 5 characteristics of consumer behavior? ›
In a general scenario, we've got five main factors that determine consumer behavior, i.e these factors regulate if a target customer purchases a product or not. These factors are namely Psychological, Social, Cultural, Personal, and Economic factors.What are the 5 determinants of consumer behavior? ›
- Psychological Factors.
- Social Factors.
- Cultural Factors.
- Personal Factors.
- Economic Factors.
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 7 customer types? ›
- Lookers. Some visitors are “just looking.” They're not after anything in particular. ...
- Bargain Hunters. Some shoppers have heard you're having a sale. ...
- Buyers. Some people are there on a mission. ...
- Researchers. Some are researching. ...
- New Customers. ...
- Dissatisfied Customers. ...
- Loyal Customers.
- New customers.
- Impulse customers.
- Angry customers.
- Insistent customers.
- Loyal customers.
Behavior patterns usually give stability and efficiency to our lives. Some examples of behavior patterns are performing tasks in a particular way, collaborating on an assignment, working in concert in the laboratory, planning experiments with your team, collaborative decision-making and managing conflict.
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 is segmentation example? ›
The aim of segmentation is to tailor marketing efforts to your ideal customer profile (ICP), i.e. the customers most likely to buy your product or service. For example, a customer at an organic food shop is likely to have some or all of these characteristics: Gender: Male or Female. Age: 25-44.What is an example of consumer segmentation? ›
The most common types of customer segmentation are:
Demographic Segmentation – based on gender, age, occupation, marital status, income, etc. Geographic Segmentation – based on country, state, or city of residence. Local businesses may even segment by specific towns or counties.
Definition: Segmentation means to divide the marketplace into parts, or segments, which are definable, accessible, actionable, and profitable and have a growth potential. In other words, a company would find it impossible to target the entire market, because of time, cost and effort restrictions.What are the 10 factors that influences consumer behavior? ›
- Psychological Factors. Human psychology plays a major role in understanding consumer behaviour. ...
- Motivation. Motivation to do something often influences the buying behaviour of the person. ...
- Perception. ...
- Learning. ...
- Attitudes and Beliefs. ...
- Social Factors. ...
- Family. ...
- Reference Groups.
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.What are the main principles of consumer behavior? ›
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 4 factors that influence a purchasing decision? ›
A customer is surrounded by four key factors when considering any purchase: the product, the price, the promotion and the sales channel. Shopping in a physical store isn't the same experience as shopping online, neither shopping in a website or a mobile app.What are the 3 types of consumer decision making behaviour? ›
What are the three types of consumer decision-making? The three types of decision-making are nominal, limited, and extended. These types of decision-making have different levels of purchase involvement.What are 10 types of consumers? ›
- Loyal customer. ...
- Aggressive customer. ...
- Knowledgeable customer. ...
- Impatient customers. ...
- Mercenary customers. ...
- Indifferent customers. ...
- Undecided customers. ...
- Dissatisfied customers.
The eight consumer rights are: Right to basic needs, Right to safety, Right to information, Right to choose, Right to representation, Right to redress, Right to consumer education, and Right to healthy environment.What are the 8 consumer types? ›
The VALS Types:
Stage 1: Problem Recognition. Stage 2: Information Gathering. Stage 3: Evaluating Solutions. Stage 4: Purchase Phase.What are the 3 types of consumer decision-making behaviour? ›
What are the three types of consumer decision-making? The three types of decision-making are nominal, limited, and extended. These types of decision-making have different levels of purchase involvement.When identifying customers needs there are 4 main methods? ›
The best way to identify their needs is to take an organized approach. Some refer to this as a customer needs analysis, which provides you with valuable insights about your target audience. Common methods for discovering what customers want include focus groups, social listening, and keyword research.What is the 5 step decision-making process? ›
The decision-making process allows for the exploration of all alternatives in order to solve a problem, and it ensures that the best solution is found. The decision-making process includes the following steps: define, identify, assess, consider, implement, and evaluate.