How many times a day do you have to make decisions?
What should I wear today, and what should I avoid?
What perfume should you use? What should I have for lunch?
It is obvious that we all make buying decisions every day, often without much thought.
Marketers are often kept awake at night by these decisions, no matter how insignificant they may seem.
We can boost revenue by decoding customer decisions.
What does consumer behaviour mean?
Consumer behaviour refers to the study of consumers and how they choose, use, or dispose of products and/or services. It also includes consumers’ emotional, psychological, and behavioural responses.
Consumer behaviour is a combination of ideas from psychology, biology and chemistry.
This guide will discuss the best types of customer segmentation.
What is the importance of consumer behaviour?
Marketers can benefit from studying consumer behaviour to understand the factors that influence consumers’ purchasing decisions.
They can identify obsolete products and fill the market gap by understanding how consumers choose products.
Marketers can also learn from consumer behaviour how to best present their products. Understanding the buying habits of consumers is key to attracting and engaging clients and converting them into buyers.
An analysis of consumer behaviour should reveal:
- What do consumers think about brands, products and their feelings?
- What makes consumers choose between different options?
- How consumers to shop and research;
- How the environment of consumers (friends, family and media) influences their behaviour How their environment (friends, family, media, etc.) influences their behaviour.
Different factors can influence consumer behaviour. Marketers need to study consumer buying patterns and identify buyer trends.
Brands influence consumer behaviour in most cases only with what they control. Think about how IKEA makes you spend more than you intended every time you go into their store.
What are the factors that make consumers say yes to these offers? Three types of factors influence consumer behaviour
- Personal factors: Demographics can influence an individual’s opinions and interests (age, gender, culture ). ).
- Psychological factors: A person’s reaction to a marketing message is influenced by their perceptions and attitudes.
- Social factors include family, friends and education.
Different types of consumer behaviour
There are four types of consumer behaviour.
1. Complex buying behaviour
This behaviour can be seen when consumers buy expensive and infrequently purchased products. They take an active role in the buying process and conduct extensive research before making a large-scale investment. Think about buying a house or car. This is an example of complex buying behaviour.
2. Buy behaviour that reduces dissonance
Although the consumer is involved in the buying process, they have difficulty discerning the differences between brands. When the consumer is worried that they will regret making a purchase, referred to as “Dissonance”.
Assume you’re buying a lawnmower. While you may choose one based on price and convenience after you have made your purchase you will want confirmation that you made the right decision.
3. Habitual buying behaviour
Habitual purchases are defined by the fact that the customer has little to no involvement in the brand or product category. Think about grocery shopping. You go to the supermarket and purchase your favourite bread. This is not strong brand loyalty, but a pattern that you have become accustomed to.
4. Variety is the best behaviour
This is where a consumer will not purchase a new product because they aren’t satisfied with their current one but because they want variety. You might try new scents of shower gel.
You can get a better understanding of the customer types by knowing which customers your e-store draws.
What influences consumer behaviour?
Consumer behaviour can be affected by many things, but these are the most common.
1. Marketing campaigns
Marketing campaigns have a significant impact on purchasing decisions. They can influence purchasing decisions by influencing consumers to switch brands or choose more expensive options if they are done correctly and consistently.
You can use marketing campaigns such as Facebook Ads for eCommerce to remind customers about products/services they need but are not always on their minds (such as insurance). A strong marketing message can influence impulse purchases.
2. Economic conditions
Economic conditions are crucial for expensive products, especially cars and houses. Positive economic conditions are known to increase confidence and allow consumers to purchase regardless of financial obligations.
For expensive purchases, the decision-making process of consumers is more complex and can be affected by personal factors.
3. Personal preferences
Personal factors can influence consumer behaviour, such as likes and dislikes, priorities, morals and values. Personal opinions can be very powerful in industries such as fashion and food.
Advertisements can certainly influence behaviour, but in the end, it is the consumers who make the decisions. It doesn’t matter what burger joint advertisements you see. You won’t start eating meat because you are vegan.
4. Influence of groups
Peer pressure can also influence consumer behaviour. Our decisions can be influenced by what our friends, family, relatives, neighbours, and acquaintances think.
Consumer behaviour is affected by social psychology. One example of this is choosing fast food over home-cooked meals. Social factors and education levels can also have an impact.
5. Purchasing power
Our purchasing power is a key factor in our behaviour. You will need to consider your budget before you make a purchase decision, even if you’re a billionaire.
Although the product may be great and the marketing could be top-notch, if you don’t have enough money to buy it, it won’t be bought.
Segmenting consumers based on their buying power will allow marketers to identify eligible consumers and get better results.
Customer behaviour patterns
Habits are not the same as buying behaviour patterns. Habits are formed as tendencies toward action, which become spontaneous over time. Patterns show a predictable mental design.
While each customer is unique in his buying habits, buying patterns can be combined to give marketers a more comprehensive picture. You can group customer behaviour patterns into:
1. Place of purchase
Customers will often split their purchases among multiple stores, even if the items are all in one store. You can think of your favourite hypermarket as a place where you can buy clothes and shoes, but you are most likely buying them from clothing brands.
If a customer is able to shop at multiple stores and can purchase the same product, they will not be loyal to one store. Marketers can identify the best locations by studying customer behaviour regarding the choice of location.
2. Purchase of items
Marketers can gain a lot of information from shopping carts, including the number of items purchased and their cost. Luxury items are less likely to be purchased in large quantities and can be purchased in bulk.
The perishability of an item, the buying power of the buyer, the unit of sale, price, number and intended use of the item all influence the purchase amount.
3. Time and frequency
Customers will shop according to their convenience and expect service, even at odd hours. This is especially true in this era of e-commerce, where everything is just a few clicks away.
The shop must meet these requirements by identifying a pattern of purchase and matching its service to that time and frequency.
Remember to take into account seasonal variations as well as regional differences.
4. Modalities of purchase
Customers can choose to either buy the item in-store or order online with a credit card and delivery.
You might be charged shipping fees if you shop online.
How a customer purchases an item can tell a lot about who he is. You can identify new ways to get customers to buy again, more often and with higher value by gathering information about their behaviour patterns.
Consider all the information you have about your customers. You can find the purchase patterns in your eCommerce analytics. To get automatic insights, you can integrate a tool such as WooCommerce or Shopify into your eCommerce platform.
Customer behaviour segmentation
Segmentation of customers and identification of buyer types have been key aspects of customer segmentation. Segmentation is more important than ever because personalization and customer experiences are key factors in determining a company’s success.
Only 33% say customer segmentation has a significant impact on their business.
Six types of behavioural segmentation are the most common among marketers.
1. You are looking for benefits
Customers who purchase toothpaste for whitening, sensitive teeth or flavour can have four reasons.
Customers’ behaviour when researching a product or service can provide valuable insight into the benefits, features and values of that product or service.
These primary benefits are what motivate customers to make a purchase decision.
2. Timing- or occasion-based
Both universal and individual occasions can be referred to as timing-based behavioural segments.
- The majority of customers and target audiences can benefit from universal occasions. Holidays and other seasonal events are good examples of when customers are more likely to make purchases.
- Recurring-personal events are buying patterns that a customer has recurrently repeated over time. You can think of birthdays, anniversaries, vacations, monthly orders, and even daily rituals like stopping for coffee every morning on your way to work.
- Rare occasions that are not related to customers are also important, but they are more unpredictable and spontaneous and therefore more difficult to predict. You could, for example, attend a friend’s marriage.
3. Rate of usage
Another common method to segment customers is through product or service usage. This is based on how often a customer interacts with or purchases a product or service. Churn or loyalty can be strong indicators of lifetime value.
4. Loyalty status for brands
Loyal customers can be a company’s most valuable asset. Loyal customers are less expensive to retain, have the highest lifetime, and can be brand advocates.
Marketers can segment customers based on their loyalty level by analysing behavioural data. This allows them to understand their needs better and ensure they are satisfied.
Loyal customers deserve special treatment and privileges, such as exclusive rewards programs that nurture and strengthen customer relationships and encourage future business.
5. User status
Depending on the nature of your business, there are many possible user statuses. Here are some examples:
- Non-users
- Prospects
- First-time buyers
- Regular users
- Ex-customers who switched to a competitor are called “defectors”.
6. Customer journey stage
Segmenting the buyer base allows marketers to personalize communications to increase conversion at all stages.
It also helps customers identify stages in which they are not making progress so that they can identify the greatest obstacles and opportunities to improve, even post-purchase.
These are just some of the traditional methods. Another type of segmentation is RFM Model. This method is very popular with eCommerce marketers as it allows them to create customer experiences based on the data they have about each segment.
RFM is a behavioural segmentation method. The letters Recency, Frequency and Monetary Value are the three letters.
These variables will show you what to do:
- Recency is the date that a customer placed their last order on your site.
- Frequency is the number of times that a customer has purchased from your site in the time period being analyzed.
- Monetary value is the amount of money each customer has spent on your site since their first order.
Two ways to perform the RFM analysis are available:
- Manually – Export your database to a spreadsheet, and analyze your customers using the rules for RFM Analysis.
- Automatically – using certain tools to create RFM dashboards.
RFM segmentation can be used to identify your most loyal and financially profitable customers.
- Find out which brands and products are causing your business to fail.
- Create custom recommendations for customers
- Solutions to certain Customer Experience issues.
Be open to listening to your customers and building a relationship with them that will keep them loyal, no matter what your competition is doing.
Frequently Asked Questions
What does it mean to be a consumer?
Consumer behaviour studies how people make purchase decisions to satisfy their wants and needs. It also examines how their emotional, mental and behavioural reactions influence buying decisions. People use concepts and ideas from many fields, including psychology, economics and biology.
What are the four types of customer buying behaviour?
There are four types: dissonance-reducing buying behaviour, habitual buying, variety-seeking, complex buying and behaviour. The type of product the consumer requires, their level of involvement and differences between brands determine the type of consumer behaviour.
What is an example of consumer behaviour?
Let’s consider the planning of a city trip for two to illustrate consumer behaviour. It might take a lot of decision-making for someone just beginning to date, while it may be extended for someone who has been together for 5+ years. A reservation at a restaurant is another example of consumer behaviour. It is easy to make a reservation at a restaurant for a night with friends, but it takes a lot of time. Making a reservation for a wedding or anniversary requires more effort.
How can you spot consumer behaviour?
An analysis of consumer behaviour helps you determine how customers choose products and services. You will need both qualitative and quantitative data, such as customer surveys and customer interviews. Also, information from observations of customers in-store or online is helpful.
What are the characteristics that define consumer behaviour?
The characteristics of consumer behaviour are determined by four factors: psychological, cultural, social, as well as personal. These factors all have an impact on the consumer’s behaviour. As a person lives, their characteristics will change.
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