How does Buyer Psychology help businesses increase revenue?

Whatever else we may be in our lives – child, parent, student, worker, lover, jogger or stamp collector – we are all consumers, all of our days. We buy and use goods and services constantly: to eat, to wear, to read, to watch, to play, to travel in; to keep us healthy, to make us wealthy and, if not wise, at least better educated. The act of consumption is therefore an integral and intimate part of our daily existence and that is true whether we have a lot of money to spend on it or very little.

A central goal of marketing is to satisfy customer needs, so marketers must have a good understanding of what their customers’ needs are if they are to satisfy them better than the competition. A thorough understanding of why and how people buy things helps marketers identify appropriate people to target and design and communicate attractive offerings. In other words, every element of the marketing plan benefits from an understanding of the customer and, with the rapid pace of change in consumer markets today, this is only going to become more important.

Research on people as consumers dates only from the mid-1980s. The main impetus for this research was practical: marketing managers wanted to know how the social and behavioural sciences could help them find the specific causes of consumer actions and, in particular, consumer buying decisions. Why did people choose Brand X as opposed to Brand Y or Z? Most importantly, how would the consumer react to a new and improved Brand X? This focus on predicting what the consumer would do under certain specified conditions was known as a positivist approach to research.

The positivist approach is the traditional form in which scientific research has been conducted. It makes several assumptions about what is being studied, the most important of which are:

• All behaviour has objectively identifiable causes and effects, which can be
• Isolated, studied and measured.
• When faced with a problem or a decision, people process all the relevant
• Information available to deal with it.
• After processing this information, people make a rational decision about the best
• Choice to take or decision to make.

As all the other social and behavioural sciences have found, one of the limitations of this practical approach is that it leaves a large amount of human behaviour totally unaccounted for.

The much-used term consumer behaviour includes all of the examples we have been looking at. That is, it would involve the buyers or customers of products, as well as the people who actually use them. It deals with the buying decision itself and far beyond. Consumer behaviour extends all the way from ‘How do we know what we want?’ – not as obvious a question as it may sound – to ‘What do we do with something we no longer want?’

In between these two phases consumer behaviour deals with many other issues. For instance:

• How do we get information about products?
• How do we assess alternative products?
• Why do different people choose or use different products?
• How do we decide on value for money?
• How much risk do we take with what products?
• Who influences our buying decisions and our use of the product?
• How are brand loyalties formed, and changed?

To summarize, a typical definition of consumer behaviour might be the following: The mental, emotional and physical activities that people engage in when selecting, purchasing, using and disposing of products and services so as to satisfy needs and desires.

So, how well do you know your customers?