Consumer behavior analysis is the correlation between behavioral psychology and behavioral economics and their lead to the purchase or consumption of goods and services. Basically, the way we think has a direct connection with the way we shop. But why is that relevant? Well, it allows companies to integrate marketing efforts by focusing the attention on things that will trigger or connect to our specific behaviors.
These triggers or connections are made with four key categories also known by the “4 P’s”: Product, Price, Place, and Promotion.
Product: Product choice and product branding have significant influence on what product a consumer will purchase. A consumer will not buy a good or service they know they will not use, and when they do purchase, they take the branding into consideration. The biggest factors as to why a consumer will purchase a well known brand are confidence in the experience (they associate bigger brands with better customer experience/service), social acceptance (consumers have a desire to fit in or be socially accepted within a social circle and bigger brands contribute to this), and loyalty (consumers find emotional attachments to brands that lead them to develop loyalty for that particular brand only. This can be formed from a personal experience or the experience of others close to them).
Price: Pricing has a huge significance in consumer purchasing. People will only pay for goods and services that they see financial value in or consider reasonable in cost. This is the largest factor in whether or not a sale is made. Consumers will not pay for something they don’t find value in or that they consider too expensive.
Place: Where to buy impacts the type of consumer you have. Some consumers only like to shop in brick-and-mortar stores, some exclusively shop online retail. This factor depends on situational influences and online environments. You cast a wider net if you offer both online and in-store shopping experiences.
Promotion: This plays into the pricing factor for short-term and long-term goods and services.
First-time consumers are more likely to purchase both long-term or short-term goods or services if they have a low intro promotional price attached. Because of this, companies strive to sell a consumer their product at a significantly lower price that the consumer would determine reasonable in hopes that they will find the value and in return be more willing to pay a premium to continue the purchase of said good or service.
A great example is HelloFresh, the meal-kit/grocery delivery service. They offer new customers who sign up with a subscription 10 free meals plus shipping ($100 value). This allows their consumers to try the subscription for FREE for a week and, in return, many of their sign ups lead to long term purchase subscriptions. The upfront cost to gain a consumer may lose HelloFresh money initially but the long-term customers they keep make up for the loss.
Reoccurring consumers are more likely to purchase a short-term or long-term good or service even if the promotional price is not significantly low. Reoccurring consumers already know the product and find the value in it as they have come back multiple times to make those purchases of that good or service. So even if the promotion is something as small as “$5 off”, “Save 10%”, or “Buy 2, Get 1,” the likelihood of that consumer making that purchase or purchasing more than they usually do is going to be higher as they will find cost savings they normally would not get and they know they will ultimately use the good or service at some point.
A great example would be a sale on laundry detergent: The consumer sees that their favorite laundry detergent is 15 percent off. They may not need detergent at that moment, or maybe they are out, but the 15 percent off captures their attention and triggers a specific thought process that will lead them to purchase, and in many cases, they will purchase more than one leading to a bigger sale for that company’s product.
Learning our consumers’ behaviors and thought process can help companies make effective campaigns that lead to an increase in overall sales of their goods and services.
