Broadly stated, there can be a managerial view as well as a holistic view on the study of consumer behaviour. The managerial view is that consumer behaviour study is an applied social science.
That is, consumer behaviour study is used as an adjunct to and as a basic for developing marketing strategies. Whereas, the holistic view considers consumer behaviour to be pure rather than as an applied social science.
This implies that consumer behaviour study involves a legitimate focus of inquiry in and of itself without necessarily being applied to marketing.
In olden days, the importance of consumers’ behavior was not realized because it was seller’s market. But modern marketing is customer-oriented.
Therefore, the study of customers’ behavior is vital in framing production policies, price policies, decisions regarding channels of distribution and above all decisions regarding sales promotion.
Importance and Significance of Studying Consumer Behaviour
Importance of Studying Consumer Behaviour – Explained with the Help of 12 Points
Consumer behaviour plays an important role in marketing management. It provides information to the marketer on the basis of which the marketer can design its marketing mix strategies and modify it in future as per the situation. For the marketer it is important to know how consumers will react to marketing programme in order to serve them effectively.
Importance of study of consumer behaviour can be explained with the help of following points:
1. Modern Marketing Philosophy:
Modern marketing philosophies include identifying consumers’ needs and satisfying them more effectively than the competitors. Thus modern marketing needs to understand consumer behaviour.
2. Goal Achievement:
The key to the company’s survival, profitability, and growth in a highly competitive marketing environment is its ability to identify and satisfy consumers unfulfilled needs better and sooner than the competitors. Thus, consumer behaviour helps in achieving marketing goals.
3. Development of Marketing Programme:
Marketing programme consists of product, price, promotion, and distribution decisions. The programme can be more relevant if it is based on the study of consumer behaviour.
4. Improving Marketing Programme Gradually:
Since consumer behaviour studies consumer response pattern on a continuous basis; marketer can easily come to know the changes taking place in the market. Based on current market trends, the marketer can make necessary changes in marketing programme to adjust with market.
5. Useful for Middlemen:
The study of consumer behaviour helps the middlemen and salesmen to perform their tasks effectively in order to meet consumer’s needs and wants successfully.
6. Predicting Market Trend:
Consumer behaviour can also help in forecasting the future trends. Due to this, the marketer can prepare its strategies well in advance in order to take advantage of the emerging opportunities, and/or for facing challenges and threats.
7. Consumer Differentiation:
Each segment needs different products and a separate marketing programme. Having knowledge of consumer differentiation is an important key to formulate different offers which are appealing to different groups of buyers. Consumer behaviour study provides details about consumer differentiations.
8. Creation and Retention of Consumers:
Marketers who base their offering after recognising consumer needs often find a ready market for their products and finds it easy to sell its products. Thus due to continuous study of consumer behaviour and attempts to meet ever-changing expectations of the buyers, the marketer can retain its consumers for longer period.
Consumer behaviour study helps the marketer to gain competitive advantage since through the study the marketer can offer more competitive products, based on consumers’ expectations. Thus it helps in improving competitive strengths of the company.
10. New Product Development:
New product is developed in order to satisfy the needs and wants of the target market. In order to develop the best-fit product, marketer must have enough knowledge about the market. Thus, the study of consumer behaviour is the basis for developing a new product successfully.
11. Dynamic Nature of Market:
Consumer behaviour focuses on dynamic nature of the market. It helps the marketer to be dynamic, alert, and active in order to satisfy consumers much better and sooner than competitors.
12. Effective Use of Productive Resources:
The study of consumer behaviour helps the marketer to direct the Organisational efforts towards consumer-oriented programmes. It ensures exact use of resources for achieving maximum efficiency.
Importance of Studying Consumer Behaviour
The importance of studying consumer behaviour is clear from the following points:
1. Facilitates Decisions Regarding Sales Promotion:
A number of important marketing decisions regarding sales promotion, brand, packaging, gifts, discounts etc., are taken on the basis of consumer behaviour. The producer comes to know about the motive behind the consumers’ purchase and they utilize the same in advertising to awaken their desire to purchase.
2. Price Policies:
The buyers of some products purchase only because particular articles are cheaper than the competitive articles available in the market. In such a case the price of such products cannot be increased.
On contrary, some other articles are purchased as they enhances the prestige and social status of persons. The prices of such things can easily increase or fixed higher prestige and social status of the persons. Some articles are purchased under particular attitudes and emotions such as khadi garments are purchased who think themselves the followers of Gandhi. Prices of articles purchased under emotional motives, can also be raised.
3. Facilitates Decisions Regarding Channels of Distribution:
The goods, which are sold and purchased solely on the basis of low price, must have cheap and economical distribution channels. Articles requiring after-sale service such as TV sets, refrigerators etc., should have different channels of distribution. Hence, decisions regarding channels of distribution are taken on the basis of consumer behaviour.
4. Implementing the “Marketing Concept”:
This calls for studying the consumer behaviour, as customers’ needs have to be given priority. Hence, identification of target market before production becomes essential to deliver the desired customer satisfaction and delight.
5. Helps in Exploiting Marketing Opportunities:
A study of consumer behaviour assists the marketers to understand the consumers, needs, aspirations, expectations, problems, etc. This knowledge will be utilised to the marketers in exploiting marketing opportunities and meeting the challenges of the market.
6. Consumers do not always Act or React Predictably:
The consumers of the past used to react to price levels as if price and quality had positive relation. Of late, consumers seek value for money, lesser price but with superior features. The consumers’ response indicates that the shift had occurred.
7. Consumer Preferences are Changing and becoming Highly Diversified:
This shift has occurred due to availability of more choice now. Hence, study of consumer behaviour is important to understand the changes.
8. Speedy Introduction of New Products:
Speedy introduction of new product with technological advancement has made the job of studying consumer behaviour more imperative. For instance, the information technologies are changing rapidly in personal computer industry.
9. Helps in Forming Production Policies:
The study of consumer behaviour affects production policies of the enterprise. Consumer behaviour discovers the habits, tastes and preferences of consumers and such discovery enables an enterprise to plan and develop its products according to these specifications. It is important for an enterprise to be in continuous touch with the changes in consumer behaviour so that required changes in products can be made.
Importance of Studying Consumer Behaviour
Study on buyer behaviour is attributed to the recent years. Until the II World War, the producer/seller thought advertisement and excessive propagation measures as enough for the sale of their goods/products. It was a common assumption about the consumers/buyers that consumer is a man devoid of desire. Any product can be sold to him at any rate.
Buyers are the conscious people and they buy themselves the things of their necessity. Hence, there is no need for the study of the buyer behaviour. On the other hand, the circumstances are changed and it has become necessary for a seller/producer that he should first study the buyer behaviour.
Importance of buyer behaviour can be made clear from the following angles:
1. Market Difference:
Several differentiations are existed in the modern markets. Uniform strategies of marketing and programmes therefore, cannot cater the necessities of these markets. Having seen the characteristics of existing markets that the seller/firm which has conquered the market in prospect to marketing of a product will also achieve success in marketing for the another product too.
This is because every market has separate buyers and their necessities as also peculiarities are different to each other. Buyer behavior and buyer motive in each and every market is differential and adequate marketing strategies cannot be determined without their study.
2. Production Policies:
Buyer behaviour is most necessary to understand in course of assessing the production policies. If the seller acknowledged with the packing made by him is preferred by the customers, he can concentrate on the packing or specific quality of that product.
3. Throat Cut Competition:
A number of producer and sellers of each product are in existence now-a-days. Every producer wants to sell his product in the market. This has resulted not only an acute but also a throat cut competition too viz. The seller sometimes, sells his product on the price less than the cost of its production.
That seller/producer can maintain himself in such acute competition, which has made his marketing programme and strategies according the behaviour of his buyers. Statement of William Lazar is important in this context. It is – “Marketing programme gives a new form to buyer behaviour by affecting the buyer’s trend, opinions, choices and priorities for increasing the demand.” For example, PHILIPS Company reduces the prices in January 2001 with all-time low, Music Systems.
4. Price Policies:
The buyers purchase several products in the market with a view of prestige in the society. The seller can charge high price for diamond and gems as these are only bought by the affluent class. If price of these items are slashed, the affluent class still not buy them. Similarly, the rich class prefers buying the gold ornaments and not of silver because gold is costlier and it is symbol of prestige in society.
The nature and social status of product affects its purchase. Thus, impressive rivals and acceptable cost as also for the development of marketing strategies, the study of buyer’s behaviour is more useful. Thus, THOMSON Company introduced 42″ T.V. for the elite class.
5. Decisions Relating to Sales Promotion:
The decision relating to sales promotion of the product is affected to a certain extent by the buyer/ consumers’ buying behaviour. As the matters relate to buyer of the product, the factors affecting the decision of purchase, time of purchase, the place and the manner of buying etc., affect the sales promotion and programmes for propagation, the sales promotion efforts cannot achieve success without the study of buyer behaviour.
Several decisions on sales promotion schemes and advertisement are made by keeping in mind, the groups of buyers. Thus, it is crystal clear that a study of buyer behaviour cooperates too much in the fields of marketing managers, maximum satisfaction giving marketing strategy, programmes and marketing related decisions and it renders important contribution in all fields of marketing.
Importance of Studying Consumer Behaviour – In Modern Marketing
In olden days, the importance of consumers’ behavior was not realized because it was seller’s market. But modern marketing is customer-oriented. Therefore, the study of customers’ behavior is vital in framing production policies, price policies, decisions regarding channels of distribution and above all decisions regarding sales promotion.
1. Production Polices:
The study of consumer behavior affects production policies of the enterprise. Consumer behaviour discovers the habits, tastes and preferences of consumers and such discovery enables an enterprise to plan and develop its products according to these specifications. It is necessary for an enterprise to be in continuous touch with the changes in consumer behavior so that necessary changes in products may be made.
2. Price Policies:
The buyer behavior is equally important in having price policies. The buyers of some products purchase only because particular articles are cheaper than the competitive articles available in the market. In such a case the price of such products cannot be raised. On the other hand, some other articles are purchased because it enhances the prestige and social status of persons.
The prices of such things can easily be prestige and social status of the persons. The price of such things can easily be raised or fixed higher. Some articles are purchased under particular attitudes and emotions such as khadi garments are purchased who think themselves the followers of Gandhi. Prices of articles purchased under emotional motives, can also be raised.
3. Decision Regarding Channels of Distribution:
The goods, which are sold and purchased solely on the basis of low price, must have cheap and economical distribution channels. In case of those articles, which require after-sale service such as T.V. sets, refrigerators etc., must have different channels of distribution. Thus, decisions regarding channels of distribution are taken on the basis of consumer behavior.
4. Decision Regarding Sales Promotion:
A study of consumer behavior is also vital in making decisions regarding sales promotion. It enables the producer to know what motive prompts consumer to make purchase and the same are utilized in advertising media to awaken desire to purchase. The marketer who takes decision regarding brand, packaging, discount, gifts etc. on the basis of consumer behaviour for promoting sales of the products.
5. Exploiting Marketing Opportunities:
A study of consumer behaviour helps the marketers to understand the consumers, needs, aspirations, expectations, problems, etc. This knowledge will be useful to the marketers in exploiting marketing opportunities and meeting the challenges of the market.
6. Consumers do not Always Act or React Predictably:
The consumers of the past used to react to price levels as if price and quality had positive relation. Today, consumers seek value for money, lesser price but with superior features. The consumers’ response indicates that the shift had occurred.
7. Consumer Preferences are Changing and Becoming Highly Diversified:
This shift has occurred due to availability of more choice now. Thus study of consumer behaviour is important to understand the changes.
8. Rapid Introduction of New Products:
Rapid introduction of new product with technological advancement has made the job of studying consumer behavior more imperative. For instance, the information technologies are changing very fast in personal computer industry.
9. Implementing the “Marketing Concept”:
This calls for studying the consumer behaviour, as customers’ needs have to be given priority. Thus identification of target market before production becomes essential to deliver the desired customer satisfaction and delight.
Thus, study of consumer behaviour plays an important role in decision-making.
Importance of Studying Consumer Behaviour – Why Study Consumer Behaviour
Why Study Consumer Behaviour?
The subject of consumer behaviour is viewed as an edifice of the marketing concept, an important orientation in marketing management. Knowledge of consumer behaviour can help the marketer understand, predict, and control the consumption patterns and behaviour of people. The study helps them understand the internal (individual determinants) and external (environmental factors) forces that impel people to act out different consumption patterns and behaviour.
With the advances in technology, consumers today are aware and more informed than in earlier times. The principles that worked earlier are no longer valid today. People are no longer restricted to local and national media; communication channels are open through satellite television and the Internet.
Moreover, with globalization, and the world tending to become a global community, there has been a change in the socio-economic and cultural environment. This is resulting in changes in consumer tastes and preferences as well as consumer lifestyles.
Moreover, a marketer’s role through marketing communication is beginning to get diluted. Consumers are turning out to be more powerful and increasingly more demanding than before. Product life cycles are becoming shorter, and it is only through efforts at research and development can a business organization sustain itself. It is essential to incorporate customer voice in product development right from the design to the marketing phase. It is thus important to understand the customer psyche and draw upon such an understanding.
As modern marketing is customer-oriented, the study of customer’s behaviour is vital in framing production policies, price policies, decisions regarding channels of distribution and above all decisions regarding sales promotion.
This is as follows:
1. Production Policies:
Consumer behaviour helps in formulating production policies. The consumer behaviour gives an insight into the various factors which prompt him to purchase and like a particular product. As the packing attracts the buyer the producer pays special attention to the packing of his product.
2. Price Policies:
The buyers’ behaviour is equally important in price policies. Some buyers purchase only because particular articles are cheaper than the competitive articles available in the market. Hence, the price of such products cannot be raised.
On the other hand, some other articles are purchased because it enhances the prestige and social status of persons. The price of such things can easily be raised. Prices of articles purchased under emotional motive can also be raised.
3. Decisions Regarding Channels of Distribution:
Goods sold and purchased solely on the basis of low price must have cheap and economical distribution channels. Articles which require after-sale services such as television sets must have different channels of distribution. Thus, decisions regarding channels of distribution are taken on the basis of consumer behaviour.
4. Decisions Regarding Sales Promotion:
The study of consumer behaviour is also vital in making decisions regarding sales promotion. It enables the producers to know what motives prompt buyers to make purchases. These are utilised in advertising media to awaken the desire to purchase. The marketer takes decision regarding brand, packaging, discount, gifts, etc. on the basis of consumer behaviour for promoting sales of his products.
Importance of Studying Consumer Behaviour
Consumer behaviour study will enable marketers to develop powerful insights based on a deep understanding of what consumers seek and then ensuring that these are easily available and at affordable prices too. Through the consumer behaviour study, the marketer seeks to understand the functional, psychological and emotional gratification which consumers seek to desire from the product.
Take for example, how Hindustan Lever Limited, had to change the brand positioning of LUX with the change in consumers’ mind set towards the emotional and functional attributes being associated with the brand.
For more than 50 years LUX has been marketed as the ‘soap of the stars’, endorsed by film stars and has always stood for glamour and luxury. However, over the past few years studies showed that the consumer in LUX’s target segment was looking for luxurious products that make her feel beautiful and special. A deep understanding of this desired ‘feeling of specialness’ led to creating a new position for Lux.
It led to strengthening the position of Lux from ‘The soap of the stars’ to a soap that ‘brings out the star in you! This shift recognizes that each woman is special, that there is something magnetic and star like in every women and that the consumer is not willing to buy into a brand whose only reason for existence is that it is endorsed by stars.
This shift in consumer’s mindset indicates that the consumer was clearly looking beyond the functional aspects with an inclination more towards the emotional and psychological facets that can be associated with the new ‘LUX’ brand of soap.
The outcome of this shift led to creating the brand LUX, which connects more deeply with the consumer and placing it more uniquely and distinctively in the consumer’s mind in comparison to other products with similar functional attributes.
The study of consumer behaviour is very relevant, especially for marketers because knowledge of the buyer(s), his or her buying motives and buying habits will help them in drafting the marketing programmes.
Specifically put, organizations try to study and analyse consumer behaviour in order to:
i. Adopt a customer culture, which incorporates customer satisfaction as an integral part of the company mission.
ii. Follow the marketing concept where the organization plays a consultative role, helping consumers to select (or identify) products and services, which would best meet their needs.
iii. Solicit support from the society by focusing on serving its members through giving consumers the freedom of choice and catering to their needs and wants.
Inspite of their best efforts, analyzing the consumers’ buying behaviour is not only a puzzle but also a challenge for the marketer. For, the consumer has always displayed a complex buying behaviour.
They have different needs and wants, often at various stages of emergence and actualization, displaying various degrees of prioritisation (some are latent, some manifest, while some others are highly dominant). Every buyer may relish her own unique way of realising these needs and wants especially since she is exposed to a very wide world of information.
Even after she takes a buying decision, her actual buying behaviour will be influenced by many individual and environmental factors. All this clearly shows that the marketer has got a tough task to study and analyse the complex consumer behaviour and draw marketing plans accordingly.
Consumer behaviour as a separate field of study has only gained attention from the 1960s. In the absence of a history or a separate research of its own then, this new discipline drew/or borrowed concepts from other scientific disciplines such as-
a. Psychology (the study of individuals)
b. Sociology (the study of groups)
c. Socio-psychology (the study of how persons are influenced by groups)
d. Cultural anthropology (the influence of the culture and society on the individual)
e. Economics (relationship between demand and supply in the flow of marketing activity).
Initially, the study of consumer research was emphasizing a managerial perspective. In that, if the marketing manager could obtain consumption related behaviour i.e., if they are able to predict consumer behaviour, then they could influence it. This type of consumer behaviour approach came to be known positivism.
But there are a group of academicians, who are interested in the study of consumer behaviour, so as to understand it better. This approach is of interest to the academicians because they are more interested in knowing consumption behaviour going by the influence of the various disciplines on the consumer behaviour.
This approach of studying the consumer behaviour with a view of understanding consumption behaviour and the interpretations of such behaviour is known as ‘interpretivism or post-modernism’. These interprevists have included many subjective aspects of consumer behaviour such as the effect of moods, emotions, type of situations etc.
These interprevists have also treated each purchase experience as unique because of the many variables which influence the behaviour at that particular moment of time. On account of its focus on the consumption experience, the interpretive approach is also referred to as experimentalism.
While conducting consumer researches, it was realised that in spite of easy acceptance of fashion and fads, consumers also had a preference for differentiated products matching their special needs, personalities and lifestyles. Thus, came into existence the importance of market segmentation.
Thus, the field of consumer behaviour will be helpful for adopting the process of market segmentation. This is a process of dividing the total potential market into smaller, homogeneous segments, based on similar needs of the target market and producing a product that will meet those needs at a profit.
Similarly, the study of consumer behaviour will also help in the process of product positioning. This refers to a marketing strategy adopted so as to position the product with a specific image in the minds of the people. This is usually done with the aid of various promotional techniques that can be adjusted to vary the perceived product image to match the specific needs of the target market.
Other fields which can make use of consumer behaviour studies is the development of new products, growth of nonprofit marketing and international marketing. Today with most of the firms going global, there is an increasing importance being given to consumer behaviour across borders to have more information about cross cultural consumer needs and preferences and consumption habits.
This information can help marketers devise the necessary promotional strategies to be adopted to meet the needs of target foreign consumers.
Importance of Studying Consumer Behaviour – Managerial and Holistic Perspective (With Limitations)
Broadly stated, there can be a managerial view as well as a holistic view on the study of consumer behaviour. The managerial view is that consumer behaviour study is an applied social science.
That is, consumer behaviour study is used as an adjunct to and as a basic for developing marketing strategies. Whereas, the holistic view considers consumer behaviour to be pure rather than as an applied social science. This implies that consumer behaviour study involves a legitimate focus of inquiry in and of itself without necessarily being applied to marketing.
As per the managerial perspective, the consumer behaviour tends to be more ‘micro’ and ‘cognitive’ in native. Micro because, here the emphasis is on the individual consumer: his or her attitudes, perceptions and lifestyle and demographic characteristics. The cognitive aspect emphasises on the thinking process of the individual consumers and the thought process which influences their decision making process. Moreover, even the environmental factors (such as the social, reference groups, family and cultural) are studied in terms of how they can influence the individual consumer.
Marketing managers justify such a focus by saying that this view is correct since the ultimate goal of the marketing strategy would be to satisfy the needs of individual consumers in a socially responsible manner.
Under this approach, individual customerised information is obtained on their needs (desired product benefits), thought processes and characteristics, which is aggregated to specific consumer segments, who are later on targeted with specific product or service offerings.
However, the managerial perspective has certain limitations:
1. This approach overemphasises’ on the rationality aspect of consumers. For all practical purposes, the consumer may not always adopt a systematic manner to process information. This will especially hold true when they purchase products for their symbolic value or on impulse or on an addictive basis. During such instances, purely a cognitive view will not help to reveal the underlying motive of the consumer’s decision-making process.
2. Purely a micro view may tend to overlook the dynamics of external (environmental) factors independent of the individual. For instance, consider the example of an individual (say the father) who is making purchases for his daughter’s wedding.
This individual’s purchase decisions would be in the context of ritual behaviour and thus be culturally derived and can provide a lot of insight to most marketers. And yet, such a perspective might be overlooked if the focus is only on individual consumer.
3. The managerial perspective tends to focus more on the purchase experience. But the long term strategies of the successful organisations have revealed that more than anything, it is the post purchase satisfaction which has helped it to remain in the market for a long time.
For instance, Toyota Kirloskar Motors (TKML) began their joint venture in India by offering the Qualis (a Multi-utility vehicle) in the least populated segment of a crowded automobile market. But very soon it became the best-selling product in its segment. This was partly due to its features of ruggedness and driving ease and more because the company paid attention to suitable pricing, quality and best-in-class suppliers resulting in post purchase satisfaction.
A holistic perspective is more macro in its orientation. It tends to focus more on the nature of consumption experience rather than the purchasing process. The purchase behaviour is viewed (or studied) in the context of shopping rather than merely as taking a purchase decision.
This means that the purchase behaviour is of little inherent interest outside its impact on the consumption experience. Unlike the managerial perspective, which is more interested in predicting what the consumer might do in the future, the holistic perspective focuses more on understanding the environmental context of the consumer’s actions.
Limitations of the Managerial Versus Holistic Perspectives:
Managerial Perspective on Consumer Behaviour:
1. This perspective over-emphasises on the ‘rationality’ of the individual consumer, which may not be practically correct.
2. This perspective takes a micro view, with a tendency to overlook the dynamics of the external environment, which can influence the consumer behaviour.
3. This perspective gives more emphasis to the purchase experience, whereas the long term strategy must ideally concentrate more on the long term customer satisfaction.
Holistic Perspective on Consumer Behaviour:
1. It will be difficult for organisation’s to act and work out marketing strategies merely based on culturally derived meaning of consumer’s actions.
2. This perspective does not put much emphasis on understanding the consumer’s purchase decisions.
3. This perspective does not ‘involve’ a systematic processing of consumer’s cognitive process, which is necessary for developing marketing strategies.
The holistic perspective also suffers from certain drawbacks:
1. Findings from the culturally derived meaning of consumer’s actions and consumption experiences may not always help in working out marketing strategies in the business context.
2. This perspective does not place sufficient emphasis on purchase decisions. But unless marketers understand how consumers reach at purchase decisions, how can they work on strategies to influence them?
3. Although, many consumer decisions are not made through a process of systematic processing, it will help marketers if they try to develop an understanding of such cognitive processes. For, this will be necessary when marketers attempt at meeting consumers needs and wants.
World over successful organisations have been those, whose marketers have made attempts to know their customers and reach out and satisfy them more efficiently. Moreover, marketers and organisations who really understand their customers have been able to develop better products and services, promote these more effectively and also devise marketing plans and strategies that foster sustainable competitive advantages over their competitors.
So it will be apt to take a balanced view on the study of consumer behaviour, i.e., along with the managerial perspective in studying consumer behaviour it will be necessary for organisations to also take a broader, holistic and macro view while trying to understand the purchasing and consumption experiences of consumers.
In the above discussion we have referred to the consumer behaviour study from the marketing manager’s and organisation’s point of view. However, the study of consumer behaviour can take a different perspective when seen through the consumer’s eye.
i. Consumers are interested in evaluating information provided by marketing organisations in order to make better product choices.
ii. Consumers are interested in taking buying decisions across a broad range of brand alternatives in order to select that product and brand which match their lifestyle.
iii. For consumers, more choices (or competition) among products is viewed as an opportunity to make a choice and gain from additional alternatives and at times, at lesser prices or discounts too.
iv. The study of consumer behaviour has not only made them better consumers but also given rise to the consumer awareness movement. The latter has helped in the protection of the consumer rights as well as ensured that organizations do not make false claims about their product or service offerings and take the consumers for a ride.