Consumer Behavior: How It Derives Implications For Marketing Strategy?
Dr. Tamal Datta Chaudhuri, Dean and Professor, Calcutta Business School (CBS)
Marketing strategies of organizations revolve around the consumer behavior of their target audience. Consumer behavior is the study of individuals, groups, or organizations, who demonstrate emotional, mental, and behavioral responses while making a purchase. By understanding the psychology of their consumers, businesses can understand how their consumers think, feel, reason, and choose between different options of brands and products. Businesses can also determine the kind of culture and environment their consumers expose themselves to, which affects their purchasing decisions. All these psychological aspects help marketers create marketing strategies and campaigns that can leave a lasting impression on the minds of consumers.
"As consumers are always buying things through various channels, they also take different approaches towards market research and analysis"
The question that arises now is about the exact implications of consumer behavior on a marketing strategy. How does consumer behavior impact the campaign ideas of a marketer? Here are the factors they consider.
1. Understanding Consumer Decision-Making Via Internet Research
Consumer decision-making is a complex behavior that involves a lot of research on the consumer's part. Whether it's a product or a service, consumers will look at reviews of numerous brands before coming to a well-informed decision. Since consumers base most of their research on the internet, companies have started analyzing consumer behavior by monitoring their search activities.
Their research findings will help companies figure out the best product attributes, the right price to set, and the optimal market conditions to market their product. In addition, the flexibility of the internet encompasses the changing consumer behavior, which can help companies focus on profitable market areas.
2. Assessing A Product's Supply And Demand
Supply and demand is a long-standing economic concept, which quantifies the proportion between the amount of supply for a product and the demand for it. Supply and demand situations are of two types. In the first situation, the supply is abundant, and the demand is scarce. In the second situation, it's vice versa; the supply is scarce, and the demand is abundant. Consumer behavior affects both cases.
The first situation stimulates companies to investigate why their product didn't meet the consumer's required needs to create sufficient demand. The second situation enables the companies to identify reasons for their product's success and increase production for the same. Consumer behavior also helps companies redesign their marketing strategies to remarket their products.
3. Determining The Sales Forecast By Studying Consumer Behavior
To estimate the expected amount of sales for a given market in a given time, companies implement quantitative and qualitative techniques in their sales forecasting. Quantitative forecasting makes a prediction based on past sales data. On the other hand, qualitative forecasting predicts product sales based on expert opinions. Studying consumer behavior helps businesses implement the best of both techniques.
As consumers are always buying things through various channels, they also take different approaches towards market research and analysis. As a result, always relying on historical data can be a risky proposition and may lead to poor forecasting. Therefore, it is vital that companies integrate historical data with a broader range of internal and external data to improve forecast accuracy. It will also help companies understand the volatility of consumer behavior and devise strategies accordingly.
4. Impact Of Advertisements On Consumer Behavior
Advertisements can leave a strong impression on the minds of the consumers. It can impact the way consumers purchase products or consider options such as watching a movie or subscribing to a streaming platform. This marketing strategy aims to challenge the embedded beliefs about brands within consumers and change their perception about the brands for the better. Therefore, carrying out such promotional activities require a thorough understanding of consumer behavior. It includes studying the likes and dislikes of consumers and ranking important aspects of brands like color, product quality, user-experience, and others.
Studying these aspects and implementing them through advertisements can bring about significant changes in the behavior of consumers. They may either switch brands or continue with the same ones. There may also be an increase in the frequency of the purchase. Thus, creating advertising strategies based on consumer behavior is vital.
5. The Increasing Use Of Psychographic Marketing
Just like demographic marketing segregates consumers based on age, gender, education, and many more, psychographic marketing targets their psychological attributes. The methodology of psychographic marketing is to understand the emotional aspects of the audience and accordingly market products and services. Businesses can classify consumers based on attitudes, aspirations, personalities, lifestyles, interests, and many more.It will help marketers to identify methods of communication based on the personalities of customers. It will also assist them in sending out messages or emails that can either influence their consumers or capitalize on their existing opinions, thus nurturing them towards becoming brand advocates.
Let's take an example of personalities to understand this concept better. A coffee chain discovered that their average audience is millennials, who like to work or study in coffee shops silently. Therefore, they decided to run ad-campaigns that will encourage them to perform this action. Similarly, a food-chain company decided to deliver food in paper bags over plastic containers after learning that their consumers value environmental safety. Actions like these are strong factors in getting people to relate to brands and becoming their loyal consumers.
These factors highlight the importance of consumer behavior and show why companies rely on this data. With marketers looking towards discovering creative methods to reach out to their audience, the future holds a lot of promise and consumer behavior is right at the centre of it.
"As consumers are always buying things through various channels, they also take different approaches towards market research and analysis"
The question that arises now is about the exact implications of consumer behavior on a marketing strategy. How does consumer behavior impact the campaign ideas of a marketer? Here are the factors they consider.
1. Understanding Consumer Decision-Making Via Internet Research
Consumer decision-making is a complex behavior that involves a lot of research on the consumer's part. Whether it's a product or a service, consumers will look at reviews of numerous brands before coming to a well-informed decision. Since consumers base most of their research on the internet, companies have started analyzing consumer behavior by monitoring their search activities.
Their research findings will help companies figure out the best product attributes, the right price to set, and the optimal market conditions to market their product. In addition, the flexibility of the internet encompasses the changing consumer behavior, which can help companies focus on profitable market areas.
2. Assessing A Product's Supply And Demand
Supply and demand is a long-standing economic concept, which quantifies the proportion between the amount of supply for a product and the demand for it. Supply and demand situations are of two types. In the first situation, the supply is abundant, and the demand is scarce. In the second situation, it's vice versa; the supply is scarce, and the demand is abundant. Consumer behavior affects both cases.
The first situation stimulates companies to investigate why their product didn't meet the consumer's required needs to create sufficient demand. The second situation enables the companies to identify reasons for their product's success and increase production for the same. Consumer behavior also helps companies redesign their marketing strategies to remarket their products.
3. Determining The Sales Forecast By Studying Consumer Behavior
To estimate the expected amount of sales for a given market in a given time, companies implement quantitative and qualitative techniques in their sales forecasting. Quantitative forecasting makes a prediction based on past sales data. On the other hand, qualitative forecasting predicts product sales based on expert opinions. Studying consumer behavior helps businesses implement the best of both techniques.
As consumers are always buying things through various channels, they also take different approaches towards market research and analysis. As a result, always relying on historical data can be a risky proposition and may lead to poor forecasting. Therefore, it is vital that companies integrate historical data with a broader range of internal and external data to improve forecast accuracy. It will also help companies understand the volatility of consumer behavior and devise strategies accordingly.
4. Impact Of Advertisements On Consumer Behavior
Advertisements can leave a strong impression on the minds of the consumers. It can impact the way consumers purchase products or consider options such as watching a movie or subscribing to a streaming platform. This marketing strategy aims to challenge the embedded beliefs about brands within consumers and change their perception about the brands for the better. Therefore, carrying out such promotional activities require a thorough understanding of consumer behavior. It includes studying the likes and dislikes of consumers and ranking important aspects of brands like color, product quality, user-experience, and others.
Studying these aspects and implementing them through advertisements can bring about significant changes in the behavior of consumers. They may either switch brands or continue with the same ones. There may also be an increase in the frequency of the purchase. Thus, creating advertising strategies based on consumer behavior is vital.
5. The Increasing Use Of Psychographic Marketing
Just like demographic marketing segregates consumers based on age, gender, education, and many more, psychographic marketing targets their psychological attributes. The methodology of psychographic marketing is to understand the emotional aspects of the audience and accordingly market products and services. Businesses can classify consumers based on attitudes, aspirations, personalities, lifestyles, interests, and many more.It will help marketers to identify methods of communication based on the personalities of customers. It will also assist them in sending out messages or emails that can either influence their consumers or capitalize on their existing opinions, thus nurturing them towards becoming brand advocates.
Let's take an example of personalities to understand this concept better. A coffee chain discovered that their average audience is millennials, who like to work or study in coffee shops silently. Therefore, they decided to run ad-campaigns that will encourage them to perform this action. Similarly, a food-chain company decided to deliver food in paper bags over plastic containers after learning that their consumers value environmental safety. Actions like these are strong factors in getting people to relate to brands and becoming their loyal consumers.
These factors highlight the importance of consumer behavior and show why companies rely on this data. With marketers looking towards discovering creative methods to reach out to their audience, the future holds a lot of promise and consumer behavior is right at the centre of it.
