Throughout the day, how many decisions do you make? What do I put on today? What scent should I wear? What will I be eating for lunch?
Consider how frequently we make purchases each day without giving them any attention.
Even though they may seem trivial, these choices keep marketers up at night. Since we can use such information to increase income by deciphering the thought processes that underlie customer decisions.
What does the term “consumer behavior” mean?
The study of consumers and the methods they employ to select, use (consume), and discard goods and services, as well as the emotional, mental, and behavioral responses of consumers, is known as consumer behavior.
Ideas from a variety of sciences, including psychology, biology, chemistry, and economics, are included in consumer behavior.
In this article, we’ll examine the various parts and characteristics of consumer behavior and talk about the best approaches to client segmentation.
What makes consumer behavior so crucial?
Understanding consumer behavior is crucial for marketers because it enables them to better communicate with customers.
They can close the market gap and pinpoint the items that are required and the products that are no longer in use by knowing how consumers choose a product.
Marketing professionals can display their goods in a way that has the greatest influence on consumers by researching consumer behavior. Understanding consumer purchasing behavior is the key to connecting with, involving, and convincing potential customers to make a purchase from you.
An examination of consumer behavior should show:
- What consumers believe and feel about various alternatives (brands, products, etc.)
- What drives consumers to select one choice over another; Consumers’ buying and research activity;
- How the environment (friends, family, media, etc.) affects how customers behave
- Numerous factors frequently affect consumer behavior. Marketers should research consumer buying trends and purchase behaviors.
Most of the time, businesses only have control over certain factors that affect consumer behavior. For example, consider how IKEA always appears to urge you to spend more money than you had planned to.
What, then, are the motivating elements for customers to consent? There are three types of variables that affect how consumers behave:
- Personal factors: Demographics can have an impact on a person’s interests and attitudes (age, gender, culture, etc.).
- psychological aspects: a person’s perceptions and attitudes will determine how they react to a marketing message.
- Social factors such as family, friends, income, level of education, and social media all affect consumer behavior.
Consumer behavior types
The four primary forms of consumer behavior are as follows:
1. Complex purchasing patterns
When buyers purchase expensive, infrequently purchased goods, they exhibit this kind of behavior. They play a significant role in the research that consumers do before making a high-value investment. Consider purchasing a home or a vehicle; these are examples of complex purchasing behaviors.
2. Dissonance-reducing purchasing patterns
Despite being heavily involved in the purchasing process, the consumer finds it challenging to distinguish different brands. Dissonance can happen when a customer fears they will regret their decision.
Consider purchasing a lawnmower. Choosing one will be dependent on cost and convenience, but once you’ve made the purchase, you’ll want to make sure you picked the appropriate one.
3. Consistent purchasing patterns
The consumer has little engagement in the product or brand category when they make habitual purchases. Consider going grocery shopping: you visit the store and purchase the bread of your choice. You don’t have strong brand loyalty; you just act in a repetitive pattern.
4. A desire for variety
In this instance, a customer buys a different product because of a desire for variety rather than dissatisfaction with the prior one. like when you experiment with different scents of shower gel.
You’ll have a better understanding of how to segment consumer types if you are aware of the types of customers your online store draws.
What influences how consumers behave?
Many factors can influence consumer behavior, but the ones that do so most frequently are:
1. Promotional efforts
Purchase decisions are significantly influenced by marketing initiatives. They can even encourage customers to switch brands or choose more expensive alternatives if done well, consistently, and with the right marketing message.
Marketing efforts, like Facebook advertisements for eCommerce, can also be used as reminders for buying products or services that are often needed but may not always be front of mind for customers (like insurance for example). Impulse purchases might be influenced by a persuasive marketing message.
2. Financial circumstances
Economic situations play a significant role, especially when it comes to pricey goods (like houses or cars). Regardless of their financial obligations, customers are known to become more self-assured and prepared to indulge in purchases in a healthy economic environment.
For more expensive purchases, the decision-making process takes longer and is subject to more subjective influences.
3. Individual tastes
Personal characteristics, like as preferences, values, morals, and priorities, can also have an impact on how consumers behave. Personal views are extremely potent in sectors like fashion or food.
Advertisements can certainly affect behavior, but ultimately, consumer preferences have a big impact on their decisions. No matter how many advertisements for burger joints you see, if you’re a vegan, you won’t start eating meat as a result.
4. Collective impact
Consumer behavior is also influenced by peer pressure. Our decisions may be greatly influenced by what our friends, neighbors, close friends, coworkers, and family members believe or do.
Consumer behavior is impacted by social psychology. For instance, choosing fast food versus prepared meals is just one illustration of this. Social and educational aspects can influence one another.
5. Ability to buy
Not to mention, our ability to buy things has a big impact on how we behave. You will think about your budget before making a purchase decision unless you are a billionaire.
Even if the product is top-notch and the marketing is spot-on, you won’t buy it if you can’t afford it.
Marketers will be able to identify eligible consumers and provide better outcomes by segmenting consumers based on their purchasing power.
Patterns of customer behavior
Patterns of purchasing are distinct from buying habits. Patterns display a predictable mental architecture, whereas habits evolve as tendencies toward activity and become spontaneous.
Each consumer has specific purchasing habits, yet overall patterns of purchasing activity give marketers a distinctive character. Customers’ tendencies can be categorized into:
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Location of Purchase
Even when all items are offered in the same store, customers frequently split their purchases over multiple. Consider your preferred hypermarket: while you can find apparel and footwear there as well, you are likely purchasing those items from real clothing manufacturers.
When a customer has the capacity and access to buy the same things from other retailers, they are not always loyal to one, unless it is the only retailer to which they have access. Marketers will be able to pinpoint important store sites by researching customer behavior in terms of location preference.
2. Items bought
Marketing professionals can learn a lot about their target audience’s purchasing habits by looking at a customer’s shopping cart. Bulk purchases of necessities are possible, although smaller, less regular purchases of luxury products are more typical.
The perishability of each item, the buyer’s purchasing power, the unit of sale, the price, the number of customers for whom the item is meant, etc., all have an impact on how much of each item is purchased.
3. The quantity and timing of purchases
Customers will shop based on their ability to pay and will anticipate service even at the most inconvenient times, particularly in the era of e-commerce where everything is just a few clicks away.
By analyzing a purchasing pattern and tailoring its services to the timing and frequency of transactions, the store must meet these requests.
One thing to keep in mind is that regional and seasonal variances must also be taken into account.
4. The buying process
Either a consumer can place an order online and pay with a credit card or when the item is delivered, or they can stroll into a store and make an immediate purchase.
Additionally, the mode of buying could encourage a buyer to spend more money (for online shopping, you might also be charged a shipping fee for example).
The method a consumer uses to buy anything reveals a lot about the kind of customer he is. You can find new strategies to encourage clients to make repeat purchases at higher prices and more frequently by learning more about their purchasing behaviors.
Consider all the client information you’ve already gathered. You can either manually search for insights in your e-analytics stores or integrate a tool with your eCommerce platform, like Shopify or WooCommerce, to gain automated insights about purchasing trends.
Segmenting based on customer behavior
Identifying different buyer types and customer segmentation has always been crucial. Effective segmentation is even more crucial now because personalization and customer experience are variables in a company’s success.
Finding a segmentation method that clarifies things and works for your company is crucial because only 33% of businesses that employ customer segmentation claim that it has a major impact.
Traditionally, the six main methods of behavioral segmentation are used by most marketers.
1. Benefits desired
When purchasing toothpaste, a consumer may do it for one of four reasons: whitening, sensitive teeth, flavor, or pricing.
Customers’ actions when researching a product or service might provide important information about the features, benefits, uses, and challenges that most motivate them to make a buy.
When a customer values one or more benefits much more than the others, those are the main motivational reasons that influence their choice to make a buy.
2. Situational or time-based
Both general and specific occasions are mentioned in behavior segments based on occasion and timing.
The vast majority of clients or the target audience are covered by universal events. For instance, people are more likely to buy particular purchases around holidays and seasonal events.
Recurring-personal events are buying patterns for a certain client that repeatedly occur over time. For instance, holidays, birthdays, anniversaries, monthly expenditures, or even daily rituals like stopping for a cup of coffee every morning on the way to work.
Rare-personal occurrences are likewise connected to specific clients, but they are more erratic and unplanned, making them harder to anticipate. For instance, going to a friend’s wedding.
3. Usefulness
Another popular method of behavior-based customer segmentation is based on the frequency with which a client interacts or makes purchases from a given product or service. Usage patterns can serve as a powerful predictor of lifetime value and, consequently, loyalty or churn.
4. Status of brand loyalty
The most precious assets for a company are its loyal consumers. They can become brand evangelists, have the highest lifetime value, and are less expensive to maintain.
Customers can be divided into groups based on how loyal they are using behavioral data analysis, which enables marketers to comprehend client needs and ensure that they are being met.
To foster and enhance the customer relationship and encourage future business, loyal clients should be given unique treatment and privileges, such as access to exclusive rewards programs.
5. User status
Depending on your company, there is a wide range of possible user statuses. Several instances are:
- Non-users
- Prospects
- initial purchasers
- frequently-used
- Defectors (ex-customers who have switched to a competitor).
6. Stage of the customer journey
Marketers may synchronize messaging and personalize experiences to enhance conversion at every stage by segmenting the audience based on buyer readiness.
Additionally, it enables them to find the stages at which customers are stagnating so they can pinpoint the biggest challenges and growth possibilities, even for post-purchase habits.
The RFM model is another method of segmentation in addition to these conventional approaches. Because it enables businesses to build customer experiences around the data they have on each customer category, this strategy is well-liked among eCommerce marketers.
Recency, Frequency, and Monetary Value are the three letters that make up the behavioral segmentation model known as RFM.
What these factors reveal is as follows:
- Recency is the time since a consumer last purchased from your website;
- Frequency is the number of times a consumer purchased from your website during the period under study;
- The amount each consumer has spent on your website since the initial purchase is the monetary value.
There are two approaches to carrying out the RFM model analysis:
- Manually by exporting your database to a spreadsheet and analyzing your clients by the RFM analysis guidelines; automatically by using certain solutions that produce RFM dashboards.
soulmates rfm - RFM segmentation and analysis will help you identify your most profitable and devoted consumers as well as:
If you want to keep your clients and audience loyal no matter how aggressive your competitors are, observe their behavior, listen to them, and develop a relationship with them before making judgments based just on intuition.
