What is Consumer Behavior?

February 23, 2021

In the simplest terms, consumer behavior refers to the study of individuals and the factors that influence their decisions to purchase products or services. It’s a useful general rubric for beginning to analyze how your company’s actions and strategies are functioning and, more importantly, how they can be improved. This guide will walk you through what consumer behavior is and how to use it to drive profits and maximize your business’s performance. 

Consumer Behavior

Selling your product or service is crucial, but it’s not the whole story. Competitive businesses are constantly looking for ways to expand their client or customer base while improving their products and services, both of which are critical to achieving long-term sales stability. To accomplish that, you’ll need to understand which factors drive consumers’ purchasing decisions and meet their needs in a personalized way. That’s where consumer behavior enters the equation. 

What is consumer behavior?

You can think of consumer behavior as an analytical approach to understanding how consumers make their purchasing decisions — that is, what they buy, why they buy it, when they buy it, and how they buy it. A wide range of factors fall under the umbrella of consumer behavior, and we describe several of the most prominent ones below. A marketer investigating consumer behavior will often take into account: 

  • What a consumer thinks and how they feel about various brands, products, or services, and how they’re influenced by marketing campaigns. 
  • How a consumer picks one product or brand over another and why. 
  • Which factors in a consumer’s environment impact their purchasing decisions or brand perceptions. (These factors might include personal preferences, economic or social pressures, and general cultural trends.)
  • When consumers are more or less likely to make a purchase. 
  • How a customer feels right before buying a product, or how they behave while deciding what to buy. 
  • How a customer feels immediately after making the purchase. 
  • How being alone or in a group impacts the decisions a consumer makes.
  • Why or how a consumer’s behavior patterns might change based on the products and services they buy.
  • Which questions or concerns are part of the decision-making process.
  • The number of touchpoints or interactions that a consumer has with a brand, product, or service before making a purchase.

Types of Consumer Behavior

Consumer behavior can be broken down into four major categories:

1. Complex buying behavior 

This type of behavior refers to purchases that often call for in-depth research on the part of the consumer — think expensive products, like a car or a home, that are also bought less frequently. This behavior is “complex” because the consumer is typically heavily involved and emotionally invested. 

2. Variety-seeking behavior 

This behavior refers to the relatively unpredictable phenomenon of a consumer switching up their purchasing habits simply because they’re looking for more variety or to experience something new. A consumer might still enjoy a specific brand of tea, for instance, but might purchase a different brand simply to experiment. 

3. Dissonance-reducing buying behavior

In this behavior, the consumer isn’t acting on a whim and remains highly involved in the purchasing process, but the decision is difficult to make. The consumer struggles to choose between brands, products, or services and is concerned they might be making the wrong choice. 

4. Habitual buying behavior 

In this type of behavior, the consumer has a low level of involvement and isn’t really researching the product, brand, or service. They act on habit, in line with established patterns. These purchases are typically low in cost – think recurring grocery items, such as coffee, sugar, bread, or cooking oil.

What Influences Consumer Behavior?

Although many factors influence consumer behavior, they largely boil down to three main concerns:

Psychological factors 

When, what, why, and how we buy is often affected by our psychological state. This is a broad category and can influence consumer behavior in ways both simple and complex. If a consumer is experiencing a sense of loss — whether from a breakup, the loss of pet, or some other issue — their purchasing actions will likely be made with comfort in mind, whether that’s food, entertainment, or something else entirely. 

Personal factors 

What is your personality, and how does it relate to the brands, products, and services that you could potentially buy? If you think of yourself as a humorous person, you might be drawn to brands that approach advertising in an ironic or comic way. If your beliefs, values, or tastes match up more closely with those of Product A than with those of Product B, you’re more likely to purchase Product A. 

Social or group factors 

We may not want to admit it, but peer pressure and other external social factors play a large role in helping us make our purchasing decisions. If everyone in your social circle has started using a new eco-friendly brand of toothpaste, you might be more likely to switch brands and see what everyone’s talking about. If someone you like — whether it’s a celebrity, a politician, or just a good friend — has positive things to say about a product, that’s likely to influence your purchasing decisions. 

Other factors can influence consumer behavior — marketing campaigns and personal purchasing power are two important ones — but by and large these three main categories encompass most of what we mean when we talk about consumer behavior. 

Why Does Consumer Behavior matter?

By now you probably have a good idea of what consumer behavior is, but you may be asking yourself why it’s so important. Essentially, analyzing consumer behavior is the best way of ensuring that you’re consistently meeting your customers’ needs and building a loyal customer base. Anticipating what consumers want and relaying that messaging to them is one of the best strategies for making sure they don’t take their purchasing power elsewhere. 

Consumer behavior insights form the foundation of competitive business models. External data and research should be the bedrock that informs your marketing strategies, not the other way around. Understanding consumer behavior is crucial for marketers, allowing them to design more effective, convincing, and targeted campaigns that will maximize return on investment. 

How to Use Consumer Behavior in Your Business

Ideally, consumer behavior insights should power and inform all facets of your marketing strategy, whether that means tweaking your product lines, fine-tuning the content you decide to create when advertising your business, or developing the narratives you foster in video and other forms of communication. 

As a marketer, you want to make sure your budget isn’t going to waste. If you’re familiar with consumer behavior related to your specific products or services, you can produce marketing copy that’s more effective. If, for instance, you conduct consumer behavior research and discover that Keyword A appears far more frequently in web searches related to your products than Keyword B, you’ll want to alter your advertising strategies to incorporate Keyword A. 

As that example suggests, the first step to using consumer behavior is collecting data that’s relevant to your business and your target audience. This can be achieved through customer surveys, focus groups, or examining reviews on the internet. Higher-level analysis can benefit from the use of analytics software. It’s also a good idea to pay attention to what your competitors are doing. Other strategies include:

  • Polling clients and customers with basic questions related to satisfaction, future desires, and changes or alterations they might like to see in your service.
  • Offering free samples of trial products or services to gauge customer reaction and then following up to gather feedback. 
  • Tracking purchasing and other activity on your website, paying attention to visit time, click-throughs, and other factors to determine what your customers pay attention to and what they’re trying to find. 

Once you’ve collected your consumer behavior data, it’s time to convert it into action. Here are the three major pathways for action that businesses often pursue: 

Marketing 

Studying consumer behavior can offer fresh insights into marketing best practices. As a simplifying example, consider the case of a company that sells organic coffee. Understanding that purchasers of organic coffee tend to be located geographically in urban centers could help the company focus the location of their ad campaigns, while also fine-tuning their copy. 

Product development 

It’s not all about marketing, however. Understanding why your customers like the products and services that they do can lead you in new, productive directions when it comes to product development, enabling you to pinpoint needs that aren’t currently being met by your competitors. Ensuring your products and services are consistently strong and engaging and developing an expansion strategy that fits your branding and audience will both benefit from consumer behavior analysis. 

Customer service 

Finally, analyzing consumer behavior can help your business streamline customer service. Simply put, when you understand what your customers want out of your product or service and how they tend to interact with it, you’ll know how to anticipate their needs and meet them — which will also keep them coming back.