Consumer behaviour is an integral part of any marketing strategy. This is what attracts the consumer’s decisions and how they react to different stimuli. Understanding consumer behaviour helps a company manage the demand for their products and services to appeal to the needs and wants of the target market accordingly.
Table of Contents
What is Consumer Behaviour?
It is a study of how people buy, use, and dispose of goods and services. It consists of many components to be taken care of.
What influences the consumer’s purchase decision?
How do they use products and services?
What are the reasons for letting go of the services or products?
What happens to the products once disposed of?
Role of Consumer Behaviour in Marketing Strategy
Understanding consumer behaviour is quite critical to planning an effective marketing strategy because it helps companies determine the needs of the market. Markets use research on customer demographics, geographic location, age, gender, etc. to gain insight into what makes their demand in the market more effective.
To attain more information about their potential customers, companies use focus groups and surveys to obtain feedback from customers about their past and current products, which helps them to look into the future potential of a new product. Once a company has received an insight into the target audience, they can begin developing marketing messages or communications that resonate with the target audience. Now the company can deliver their products and services to meet the demands of their target audience.
Methods of Consumer Behaviour Research
There are numerous ways to gain insight into consumer behaviour, including focus groups, surveys, feedback, observational studies, analysis, and secondary data, which includes government and company records. Each method has its own strengths and weaknesses, which researchers need to understand while choosing those that best suit their project. Carrying out market research requires a huge amount of funds to carry out, but it also brings in important insight into customers’ thinking and the best return for their product.
Need to Study Consumer Behaviour
If a company needs to progress, they need to understand the behaviour of their target market to develop an effective marketing strategy. A few critical aspects for the requirement of consumer behaviour are;
Retention of Consumers
It is the ability of a business to retain existing customers and continue to generate revenue from them. Companies use different tactics to convert their first-time buyers into repeat shoppers. Customer retention is vital in driving repeat purchases and ongoing value from your existing customer base. One cited rule is that it costs five times more to acquire a new customer than to retain an existing one.
The two most important factors in improving customer retention are understanding customer satisfaction and loyalty. This led to increased profit, lower cost, increased average order value, and the acquisition of brand ambassadors. Along with that, the company learns about the factors that cause them to lose existing customers so that they can be improved.
New Products and Relevant Marketing Program
New products are introduced into the market based on the needs of their target market. To create successful product companies, they need to understand the needs and wants of their consumers. Then this information can be utilised for designing new products. This helps the companies to stay one step ahead of the competition. Now, to reach the target audience for whom the product has been introduced, there is a need to create a target-based advertisement. Each campaign can have a specific target group and a different message to communicate. A study of consumer behaviour enables marketers to understand what motivates consumers to make purchases.
Prediction of Market Trends
Trends can be predicted by understanding the consumer’s behaviour, which consists of their needs and wants. By doing so, a company can have an idea of what new trends might prevail in the future in the market. They can develop products and services to meet these unique needs and wants. Let’s take an example. In recent years, demand for electronic vehicles and organic food has emerged in the market due to rising fuel prices and health concerns, thus increasing the number of products which are being presented by different companies in the market for the same.
Competition
Competitors can gain the advantage by introducing a product into the market by responding to the demands of their target consumers based on the study of their behaviour. Companies need to keep an eye on competitors as well, how they are responding to consumer demands and how you can develop your product to be superior to theirs. For example, when the government announced the electric vehicle, Tata introduced its car in that segment with a low budget and had an edge over the other companies out there in the market.
Improve Customer Services
Consumers require different levels of customer service, and an understanding of what differentiates between different customer bases will help an organisation in providing appropriate services for individual needs. This also changes with the demographic and with every product. We’ve all approached a customer service representative, and they usually ask us to share our experience rating. That is to know about the customer’s behaviour.
Conclusion
Almost every company uses consumer behaviour to improve its existing products to align themselves with the marketing trends. Consumer behaviour analysis has emerged as an important tool to understand your customer base. By looking into customer psychology and the forces behind customers’ buying behaviour, companies can bring new products into the market, generate target-based campaigns and increase their profitability.
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I am Adesh Vats presently pursuing my MBA in Business Analytics. I am an optimistic person who believe more in practical than in theoretical. Exploring the different places and taking photographs is my hobby.