THE ROLE OF VALUE MAXIMIZATION IN CONSUMER BEHAVIOR 1314 (R)
THE ROLE OF VALUE MAXIMIZATION IN CONSUMER BEHAVIOR 1314 (R)
THE ROLE OF VALUE MAXIMIZATION IN CONSUMER BEHAVIOR 1314 (R)
Studying consumer behavior is important because this way marketers can understand
what influences consumers’ buying decisions. By understanding how consumers decide
on a product they can fill in the gap in the market and identify the products that are
needed and the products that are obsolete. Studying consumer behaviour also helps
marketers decide how to present their products in a way that generates maximum
impact on consumers. Consumer behavior is often influenced by different factors.
Marketers should study consumer purchase patterns and figure out buyer trends. In most
cases, brands influence consumer behavior only with the things they can control; like
how IKEA seems to compel you to spend more than what you intended to every time
you walk into the store.
There are three categories of factors that influence consumer behavior:
Personal factors: an individual’s interests and opinions that can be influenced by
demographics (age, gender, culture, etc.).
Social factors: family, friends, education level, social media, income, they all influence
consumers’ behavior.
Types of Consumer Behavior
There are four main types of consumer behavior:
Complex buying behavior:- This type of behavior is encountered when consumers are
buying an expensive, infrequently bought product. They are highly involved in the
purchase process and consumers’ research before committing to invest. Imagine buying a
house or a car; these are an example of a complex buying behavior.
Variety seeking behavior:-In this situation, a consumer purchases a different product not
because they weren’t satisfied with the previous one, but because they seek variety. Like
when you are trying out new shower gel scents.
What affects Consumer Behavior?
Marketing campaigns:- Marketing campaigns influence purchasing decisions a lot. If
done right and regularly, with the right marketing message, they can even persuade
consumers to change brands or opt for more expensive alternatives. Marketing campaigns
can even be used as reminders for products/services that need to be bought regularly but
are not necessarily on customers’ top of mind (like insurance for example). A good
marketing message can influence impulse purchases.
Economic conditions:- For expensive products especially (like houses or cars) economic
conditions play a big part. A positive economic environment is known to make consumers
more confident and willing to indulge in purchases irrespective of their personal financial
liabilities. Consumers make decisions in a longer time period for expensive purchases and
the buying process can be influenced by more personal factors at the same time.
Personal preferences:- Consumer behavior can also be influenced by personal factors,
likes, dislikes, priorities, morals, and values. In industries like fashion or food personal
opinions are especially powerful. Advertisement can, of course, help but at the end of the
day consumers’ choices are greatly influenced by their preferences. If you’re vegan, it
doesn’t matter how many burger joint ads you see, you’re probably not going to start
eating meat because of that.
Group influence:- Peer pressure also influences consumer behavior. What our family
members, classmates, immediate relatives, neighbors, and acquaintances think or do can
play a significant role in our decisions. Social psychology impacts consumer behavior.
Choosing fast food over home-cooked meals, for example, is just one of such situations.
Education levels and social factors can have an impact.
Purchasing power:- Last but not least, our purchasing power plays a significant role in
influencing our behavior. Unless you are a billionaire, you will take your budget into
consideration before making a purchase decision. The product may be excellent, the
marketing could be on point, but if you don’t have the money for it, you won’t buy it.
Segmenting consumers based on their buying capacity will help marketers determine
eligible consumers and achieve better results.
Consumer Behavior Pattern
Buying behavior patterns are not synonymous with buying habits. Habits are developed as
tendencies towards an action and they become spontaneous over time, while patterns show a
predictable mental design. Each customer has his unique buying habits, while buying
behavior patterns are collective and offer marketers a unique characterization. Customer
behavior patterns can be grouped into:
Place of purchase:- Most of the time customers will divide their purchases in several
stores even if all items are available in the same store. Think of our favorite
hypermarket: although we can find clothes and shoes there as well, we are probably
buying those from actual clothing brands. When a customer has the capability and the
access to purchase the same products in different stores, they are not permanently loyal
to any store, unless that’s the only store they have access to. Studying customer behavior
in terms of choice of place will help marketers identify key store locations.
Items purchased:- Things to consider: the items that were purchased and how much of
each item was purchased. Necessity items can be bought in bulk while luxury items are
more likely to be purchased less frequently and in small quantities. The amount of each
item purchased is influenced by the perishability of the item, the purchasing power of
the buyer, unit of sale, price, number of consumers for whom the item is intended, etc.
Analyzing a shopping cart can give marketers lots of consumer insights.
Accurate prediction of future customer behavior:– One should always use predictive
customer behavior modeling techniques – instead of just looking in the rear-view mirror
of historical data.
Designing and delivering superior customer value will help organizations develop winning
and retention strategies in an environment where competition has eroded other bases for
differentiation and market leadership.
CONCLUSION
Customers are more than just avid and hard-to-please individuals patronizing your business.
Businesses must come to understand that customers are their most valuable long-term
strategic partners. Organizations must understand that customer value is not simply a tactic
or short-term oriented endeavor; it is a way of doing business, and understanding the
dynamics of business value drivers and how they interact to create profitability and success
overtime. Value over time (VOT) is what builds strong and lasting businesses, as well as
what creates market drivers and leaders.