Why Study Consumer Behaviour?

Insights about potential customers can help companies shape marketing strategy.

The study of consumer behavior provides companies with valuable information about its consumers and prospects, including probable likes and dislikes, spending patterns and motivators to purchase. This information helps companies time product launches and sales promotions, schedule customer service staff and more.

Consumer Behavior

ConsumerPsychologist.com, part of the University of Southern California, defines consumer behavior as "the study of individuals, groups or organizations and the processes they use to select, secure, use and dispose of products, services, experiences or ideas to satisfy needs." Essentially, consumer behavior deals with how frequently a person or organization may purchase an item from a company. It closely relates to elements of customer service--such as problem resolution and overall satisfaction--and to marketing strategies such as pricing, promotion and product placement.

Marketing Strategy

Consumer research allows companies to market more effectively by including images and text designed to resonate with a target demographic and by scheduling those ads during certain shows or time slots. As well, understanding behavior may lead to changes in the design of a pilot product, a product's packaging or its position within the store. Understanding why customers buy what they do also helps a company create campaigns to encourage repeat purchase and referrals.

Find a Competitive Edge

Consumers make decisions for different reasons, such as price, style, durability and taste. These reasons differ across categories and even within categories across time. By being aware of consumers' current behavior, a company has an opportunity to create a competitive edge and to steal business from the competition. This can include strategically timed sales, new designs, improved customer service or even a new channel. For example, many companies found a competitive edge and experienced tremendous growth by offering enhanced service or shipping discounts when online shopping became commonplace.

Stay in Business

Periods of time, such as the great recession of 2008, show another fundamental reason why companies need consumer behavior research. Knowing when a turnaround is going to begin can be crucial for production schedules. But, even more important, knowing that a recession is beginning---and that it's not just a slow month or two---can mean the difference between making quick changes to meet new consumer needs and the potential failure of a business.

Be Better Consumers

By studying and understanding consumer behavior, we can all become better consumers. When you know that hardware stores always have paint on sale on Memorial Day weekend, you may decide to delay a project by a few weeks or even to stock up at that time. Such awareness can also pay dividends at the grocery store. Many items are typically cheaper (per ounce, pound, etc.) in the larger size. However, some consumers may be surprised to know that this is not always the case. Knowing this fact can lead some people to begin always checking the unit price.

References

• USC Marshall: Consumer Behavior
• USC Marshall: Consumer Behavior -- The Psychology of Marketing
• Harvard Business School: Marketing After the Recession