Consumer behavior
Consumer behavior is how a consumer acts or carries out activities related to purchase, use, and disposal. It is shaped by consumer emotions, attitudes, and preferences.
Researching consumer behavior is essential for businesses to understand their consumers. It uncovers the reasons why consumers buy one product and not another. What factors play a role in influencing the decision. In addition, businesses can also reveal how and why some consumers are willing to recommend products to others, but others are not.
Understanding consumer behavior is helpful for:
- Finding out the most appropriate products to sell
- Developing effective marketing plans and strategies
- Growing consumer loyalty
- Driving higher engagement by consumers
Types of consumer behavior
Routine, informed, and impulsive buying behaviors
Consumer behavior related to purchases is distinguished as follows:
- Routine or habitual purchases
- Informed purchasing
- Impulse buying
Routine buying behavior is usually for everyday items such as toiletries, cereal, food, and drinks. Consumers do it routinely with little consideration. For example, they will shop when supplies run out.
Companies usually use sales promotions to attract customers to shop. For example, they use discounts, vouchers, or buy-one-get-one-free (BOGOF). Even if supplies don’t run out, consumers are often attracted to such promotions to save on routine expenses.
Informed buying behavior involves more deliberation and thought. Consumers will usually investigate before making a decision. For example, they consider price, brand, quality, specifications, or other alternatives.
These purchases are usually for non-routine, high-priced, and long-lasting items such as cars, smartphones, and household furniture.
Impulsive buying behavior is unexpected and without any prior planning. It’s different from routine buying. Impulse buying happens instantly. For example, when you are at the cashier paying, you see candy or chocolate and immediately buy.
Routine purchases may require planning, especially concerning the monthly budget and allocation. But it’s not with impulse buying.
Businesses usually design shelving and organize impulse items as attractively as possible. They place their selling points where customers have some time amidst their daily activities, for example, at the checkout counter.
Complex-buying, dissonance-reducing buying, habitual buying, and variety-seeking buying behaviors
Another classification divides consumer buying behavior based on how involved consumers are and how knowledgeable they are about brand differences.
Complex buying behavior – high involvement by consumers in which they spend time exploring brands and understanding their differences. This behavior is usually shown when consumers buy products at costly prices, but the frequency is rare.
Dissonance-reducing buying behavior – high involvement, but consumers have difficulty understanding brand differences. For example, consumers buy flat-screen TVs where each brand has similar specifications, making it difficult for them to decide. As a result, they worry about making the wrong choice and regretting their decision later (dissonance).
Habitual buying behavior – low involvement and do not perceive significant differences between brands. Purchase decisions are based more on habit than having an emotional attachment to a brand.
Variety-seeking buying behavior – low involvement but perceived significant differences between brands. Purchases are driven more by a curiosity about alternative brands. For example, you buy toothpaste with a new brand. Your decision is not based on dissatisfaction with the previous brand but because you want to try something new.
Factors influencing consumer behavior
Several factors affect consumer buying behavior, including:
- Personal factors include age, personality, lifestyle, job, and financial and economic conditions.
- Psychological factors such as perception, motivation, beliefs, and attitudes.
- Social and cultural factors include social status, family, friends, reference groups, and religious and ethnic background.
Customer service
Providing superior customer service is a way to satisfy consumers. These services are received by consumers before, during, and after they buy goods or services.
For example, a company provides a standard product, relatively similar to its competitors. However, the company offers better after-sales service.
After-sales service is an added value for the company. This is a reason for customers to keep in touch with the company and continue to buy products.
Good customer service and benefits
Good customer service contributes to the company’s success. In addition, it provides benefits such as:
- Customer loyalty
- Better reputation
- Employee satisfaction
Customer loyalty
Customer loyalty is the key to making more sales. When customers get superior service, they will be more likely to repurchase. Thus, this will increase repeat purchases. As a result, combined with sales to new customers, the company’s sales can increase tremendously.
Maintaining loyal customers is also relatively cheaper than acquiring new customers. Because they are loyal to the brand, customers will come by themselves, making it easier for businesses to promote.
Conversely, companies require high promotional costs to attract new customers. Therefore, they must promote the product heavily to increase awareness and generate interest and desire. If successful, consumers will take action by buying the product.
Long story short, customer loyalty doesn’t just lead to more sales. But, it contributes to higher profits due to lower promotion costs.
Reputation boost
Consistency in providing good service enhances the company’s reputation. It will create goodwill and increase the company’s value.
Goodwill allows a company to be worth more than its tangible assets. For example, when a company has a strong reputation with a loyal and satisfied customer base, stakeholders will value the company highly. And when it becomes a takeover target, the acquirer will be willing to pay a high premium to compensate for the goodwill.
In addition, a good reputation increases acceptance. For example, customers might recommend a product to their friends or family. As a result, their friends or family will more readily accept and trust the brand. Thus, they will be likelier to buy from the company over other, less preferred options.
So, in the end, a good reputation makes it easier for companies to attract new customers. And that means more significant opportunities to increase market share.
Employee satisfaction
If customers are satisfied, they are less likely to complain. Thus, fewer complaints will be handled. And it motivates employees as they don’t have to engage in tiring and emotionally draining complaint handling.
In addition, a good reputation makes it easier for companies to attract external talent. They are interested and want to work in the company. They expect the company to provide better job security because customer satisfaction and a good reputation will support the business to growth in the long term.
Poor customer service and the downsides
Bad customer service has the opposite effect of the above. It causes:
- Disloyal customers
- Bad reputation
- Dissatisfaction and low employee morale
In addition, poor customer service has other consequences, such as:
- Decreased profits – revenues decline, and the company cost more to promote the product.
- Reduced market share – sales fall, and customers switch to competitors.
- Undermining competitive advantage – despite having a superior product, poor customer service spoils it.
Several reasons explain poor customer service, including:
- Hired the wrong people – employees who provide assistance and handle customer complaints are not the right people.
- Minimal training – employees’ knowledge and skills are insufficient to provide the service.
- Employee fatigue – employees may have to handle numerous, time-consuming, and tiring services and complaints.
- Misunderstanding customer expectations – perhaps due to errors in procedures or employees not having the proper capabilities to explore consumer expectations.
- Low employee engagement – employees do not have an intense and personal emotional attachment to customers.
Customer satisfaction
Satisfying customer needs is essential for business. If customers are satisfied, they keep buying. They may engage more deeply by, for example, recommending products to their colleagues.
Conversely, a company cannot sell its product if the customer is unsatisfied. Customers are more likely to switch to competitors because they can satisfy them better. As a result, the company cannot profit because it cannot generate sales revenue. In fact, the company may go out of business.
Maximizing customer satisfaction
Several ways to create customer satisfaction, including:
- Market research – Companies study customers’ needs, wants, and buying behavior. They then use the results to develop marketing plans and strategies, including improving the marketing mix and customer service.
- Staff training and motivation – Companies must ensure their employees have the proper knowledge and skills. They must also be enthusiastic about their job, especially customer service.
- After-sales service – This service adds value to the product. For example, a furniture company provides free furniture installation services.
- Customer complaints procedures – Effective procedures for dealing with complaints make customers more likely to return to business. This includes who should handle complaints, how they should be processed, and how long they should take.
