Understanding the consumer decision-making process is integral to influencing the outcome of consumer behavior.
NB: This is an article from EHL
The consumer cannot be viewed as an abstract, making random decisions based upon convenience, opportunity or chance. Rather, there is ample research to suggest that consumers can be well-understood personas and their behaviors can be – if not overtly predicted – then influenced in a certain direction that will satisfy both their needs and desires along with those of the service or product provider.
What is Consumer Behaviour?
The study of consumer behavior is concerned with how individuals and organizations make purchases and support brands. Behavior, motivations, and psychology are the main areas of study in this field. The important thing to know is that the buying journey is composed of countless small and large consumer behaviors that can be influenced to make the final buying decision in the best interests of both the consumer and the product or service provider. Consumer behavior is at the root of the consumer decision-making process, and so it must be clearly understood, defined and acted upon across all service interactions.
Why is Consumer Behaviour so important?
Consumer behavior defines what channels the consumer will go through on their way to making a buying decision. What is so important – and interesting – about consumer behavior is that everyone arrives at decisions in their own unique way. But it’s not so unique that it can’t be studied and predicted. It puts the onus on product and service providers to do the research and understand their target market and their respective consumer behaviors.
It’s actually the decision-making process that must be understood and leveraged, and consumer behavior goes hand-in-hand with that. Consumer behavior is the process. When a consumer embarks on the buying journey, they exhibit certain behaviors. They think, feel and take action. These thoughts, feelings, and actions can be “helped along” or guided. It is the understanding of consumer behavior that enables a product or service provider to help the consumer make a satisfactory choice.
In turn, this enables the provider to:
Improve marketing and communication
Understanding consumer behavior enables a product or service provider to improve marketing and communication. For example, a company that makes sports equipment may have identified that their customers are more likely to purchase their products online than in-store. They can then use this information to improve the way they market their products online.
Improve consumer retention rates
Understanding consumer behavior can help a product or service provider identify growth opportunities and develop strategies to improve customer retention. It’s also a great way to identify any problems that may be impacting their business, such as an outdated website or slow response times from customer support teams.
Increase consumer loyalty
By understanding their consumers, businesses can create a product tailored to their specific needs. This will increase customer satisfaction, which in turn leads to increased loyalty, or even advocacy.
Better predict trends in consumer behavior
Understanding consumer behaviour is a crucial part of running a successful business. Companies need to know what consumers want, when they want it and where they can find it. Understanding how consumers behave can help businesses better predict trends in the market, allowing them to make better-informed decisions about how to operate their companies. Companies that understand the needs of their consumers will be able to provide products and services that are more in line with what those consumers want. This can lead to increased sales and brand loyalty from loyal customers.
For example, suppose you’re running a restaurant chain and you know that your customers prefer takeout over dining-in experiences, in that case, you could use this information to determine where you should open new locations and how many tables you need at each location (or whether or not your current number of seats is sufficient). You could also use this knowledge to determine which menu items should be offered as takeout options versus dine-in options based on what your customers want most often.