Definition: Consumer Behavior is the observational activity conducted to study the behavior of the consumers in the marketplace from the time they enter the market and initiate the buying decision till the final purchase is made.
In other words, consumer behavior is the study of how the consumers, make purchase decisions and what are the underlying factors that influence such decisions.
The marketers believe that by understanding what compels an individual to buy a particular product or service over the other, it is easy to identify which product are in need and which have become obsolete and accordingly the marketing strategies could be designed.
Importance of Consumer Behavior
- It is essential for the marketer to study the behavior of the consumers in order to make better strategic marketing decisions. If the marketer has complete knowledge about the consumer’s likings or disliking, then he can predict the response of the potential customers towards his offerings.Thus, by studying the consumer behavior before and during purchase helps in production scheduling, designing, pricing, positioning, segmentation, advertising and other promotional activities.
- The study of consumer behaviour is equally important for non-profit organizations such as governmental agencies, hospitals, NGO’s, charitable organizations. For example, the polio campaigns can be designed for the vulnerable sections of the society who cannot afford the basic livelihood.
- The Government also studies consumer behavior to provide them with the necessary goods and services, understanding the potential future problems, such as pollution, anti-plastic drive, Swacch Bharat Abhiyan, traffic, etc.
- The understanding of a behaviour of a consumer is necessary before the launch of the demarketing programmes. For example, motives, attitude, behavior of the customers behind the purchase of injurious products Viz. Cigarettes, Tobacco, etc. should be properly understood.
7 O’s Framework for Consumer Behavior
- Occupants – Who is the Consumer?: This questions makes it easier to know about the consumer’s overall profile in relation to geographic, psychographic, demographic factors.The geographic factors state the particular area to which the consumer belongs, while psychographic factors lead to the understanding of the consumer’s lifestyle often reflected in their interest, activities and opinion.
Similarly, demographic factors enable the understanding of consumers age, income, sex, education, and occupation.
- Object – What does the Consumer Buy?: It determines the product proposition which the consumer purchases, i.e. the brand, product or product form. Further, it will also identify the specification, colour, size, type, variant, etc which the customer seeks to buy.
- Objective – Why is Consumer Buying?: It gives reason for the purchase of the product by the customer, in terms of the needs satisfied or benefits expected from the product.
For example, Complan is expected to increase the height of the child.
- Occasion- When do they Buy?: It ascertains the buying frequency (how often) and the occasion on which the customer tend to buy the product or services.
For Example, Item whose ticket size is high, such as television, air conditioner, are bought during Diwali or New Year.
- Outlet – Where do they Buy?: It identifies the outlet, be it a retail shop, online platform i.e. app or website, departmental store or any other location from where the customer makes the buying decision.
For example: Do customers buy a mobile phone from a retail outlet or online via Amazon or Flipkart?
- Operations – How do they Buy?: It determines the background information which the consumer collects from various sources, before making the purchase.
For example: Before buying a laptop consumers often look for the reviews of the latest laptops, as well as ask various questions from the company’s representatives to get assured of the product quality.
- Organization – Who is Involved?: It determines the management of the sources of information which influence the buying decision of the consumer.
Thus, marketers try to understand consumer psychology with respect to their purchase decisions and identify the factors influencing consumer behaviour.