Why Is Understanding Consumer Behavior Important for Businesses

Consumer Behavior - Complete Controller

Consumer behavior can be defined as a study of processes involved when individuals or groups select, purchase, use, or dispose of products, services, ideas, or experiences to satisfy their individual and collective needs and desires. Consumer behavior is considered a process because it involves the issues that influence the consumer before, during, and after the purchase. The three stages of the consumption process include pre-purchase issues, purchase issues, and post-purchase issues. Understanding how a business’s consumers behave offers great insight into maintaining and growing customer satisfaction levels and maintaining market share. This article looks at how understanding consumer behavior is beneficial for a business. Check out America's Best Bookkeepers

Every person has what is known as the ‘self-concept,’ which is a collection of the beliefs that a person holds about their attributes and qualities. This self-concept is divided into two segments the inner self and the outer self. The self also includes three different dimensions; self-esteem, the ideal self, and the actual self. Research suggests that a person has as many selves as they have different social roles. Jason, for example, has multiple selves based upon his different social roles. He has a professional self at work (self-esteem), a family self at home (ideal self), and an adventurous self during the weekend (actual self).  The ideal self is a person’s conception of how he or she would like to be, while the actual self is our more realistic appraisal of the qualities we do and do not have. Check out America's Best Bookkeepers

We choose some products because we think they are consistent with our actual self, while we buy others to help us reach an ideal standard. Products may be purchased because they are believed to be instrumental in helping the consumer achieve the goal of approaching the ideal self.  Discrepancies between customers’ ideal and actual selves can help indicate to marketers what products to consumers would help close the gap between themselves. For example, if the consumer’s ideal self includes being more beautiful, the marketer can offer a product to help fill this ‘ideal self’ desire.

Demographics comprise the typical characteristics of your target market, i.e., people who purchase your product or service. These characteristics include age, gender, annual income, region or country, type of occupation, education, social status, and many more. These characteristics have defined numbers and are used to get a fair representation of market size and an idea of who the ideal consumer may be based on general statistics. Check out America's Best Bookkeepers

On the other hand, psychographics takes these characteristics one step further and targets customers’ psychology, lifestyles, and behaviors. Psychographics include characteristics such as where target customers like to travel to when they are on vacation, hobbies, and interests they may have, values and opinions that they hold, and how they behave. Psychographics are unlike demographics as they are more content and research-based data that cannot be easily attributed to a number.  Psychographics are an extremely important tool for marketers as it helps them stay in touch with changing consumer preferences and trends. It also helps them get into the mind of the actual consumer to identify all the key elements that make the product important for them at a more individual level rather than at a collective level. This helps in reducing the risk of losing market share because of a change in consumer preference or a new trend that other competitors would not be able to pick up upon if they were simply focused on the demographic and not the psychographic aspect of marketing.

By understanding the way, consumers behave and think, businesses can improve their products and services to meet those standards and expectations. Consumer behavior is an important concept for business owners to understand if they are to grow and succeed.

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