A look inside the consumer's mind

What is consumer behaviour?

The study of individuals, groups or organisations and the processes they use to select, secure, use and dispose of products, services, experiences or ideas, to satisfy the needs, and the impacts of these processes have on the consumer and society.

Consumer behaviour is powerful and must be used ethically. When you apply consumer behaviour in marketing, you are putting the user at the centre of the marketing activity. Best marketers are those who have customer’s interest at heart.

Psychological factors that influence consumer behaviour:

1. Motivating customers:

Think about the last time you bought something. Ask yourself a simple question. Why did I buy it? The answer most certainly is that you felt you needed it. Something motivated you to shop for that item, buy it and use it. Consumers only buy when they are motivated. 

Understanding consumer behaviour = understanding motivation

If you know what drives people to buy products and services, you can make sure that your products have the right benefits and features that people want. But its more than that, if you also understand how that motivation develops inside that person, you can communicate more effectively what your services and products can do. You can understand when people are more likely to buy and that helps you to market to them at the right time.

Needs: A perceived lack of something. They are the basis of all motivations. When you sense you are missing something, you are motivated. If you become motivated enough, then you want it. 

Wants: Specific satisfiers that fill that gap. When consumers sense a gap in something, they first ask themselves do I need this. If so they move from needing it to wanting it. They are motivated.

How do you motivate a consumer?

Feature benefit laddering: Think about this as unpacking your product, by starting with its primary features and how they connect to the benefits they generate and how those benefits ladder up to the values that people want.

Example: Imagine selling drill bits. How do we motivate consumers to buy drill bits? Well here is a simple feature benefit ladder.

At the bottom is the product and right above it are the features. Then above the feature is the primary benefit that it delivers. In a drill bit, its a hole. Now keep going up the ladder and you can see that you can do a lot of things with a hole including hanging a picture and so on. To motivate consumers we show by how their homes would be comfortable if they had memorable pictures on the wall. Pictures like family vacations and so on. That makes them realise they are missing something. Then we have to show them how drilling a hole lets them hang that picture. That activates them to 'want' a drill bit to fill their 'need'. And finally, we direct that 'want' to our specific model of drill bit and show them how ours does a better job than competitors. 

Great markets motivate by activating needs and directing wants. You create a feature benefit ladder starting from bottom-up but then you motivate consumers starting at the top and working down.

2. Dealing with uncertainty:

Do you remember a time when you are just about to buy something, but at the last minute you stopped and said ‘NO’. So what stopped you? It was most likely because you were worried about something. There was too much risk around the purchase, so you walked away. Being a consumer is risky business. 

As a marketer you have to understand the risks and uncertainties faced by your customers and figure out ways to lower that risk. The lower the risk to consumers the more likely that are to buy the product and the less likely they are to complain it afterwards.

Consumers face different types of risk:

• Financial risk: Risk of loosing or wasting money on the purchase/deal
• Physical risk: Risk of injury from using a wrong product or using a product incorrectly.
• Functional risk: Risk of buying a product that doesn’t work as expected
• Psychological risk: Feeling bad about the purchase, perhaps feeling guilty or even foolish

When people face these risks, there are 2 ways they think about it. First they wonder about their downside risk - what will I lose? They also wonder about their upside risk - what will I gain? Research shows that people do more to avoid losses than they do to increasing their gains. This is known as “Loss Aversion bias”. 

How to help consumers deal with uncertainty?

• Provide as much authentic information as you can about the product.
• Show comparisons between your product and other competitions.
• Provide independent test data on how your product works.
• Give consumers access to knowledgeable and trustworthy experts.
• Share testimonials of other consumers about their experiences with your product.
• Make products easy to purchase.
• Allow customers to inspect products.

Tip: Try to give your customers, 3 choices of your product. A high priced high-functioning product. A low priced low-functioning option and a middle option. Research shows that people often select the middle option when they aren’t sure what to buy.

3. Personality affects consumers

This is a very important aspect of consumer behaviour. Customers are complex and their mental makeup affects everything they do. Study of personality is very complicated with many different theories and approaches. But for marketers, one personality factor you must understand is known as self concept. 

Self concept:

A person’s ideas and feelings about himself/herself. Each of us have more than one concept of ourselves. The 'real image' is how people actually see you. Your 'self image' is how you see yourself regardless of how people see you. And your 'possible self' is what you aspire to become one day. Its like an ideal self image. 'Possible self' sometimes also goes the other direction, like sometimes we hold an image of ourselves in our head of what we want to avoid becoming. Example: We want to avoid becoming a bad parent/friend. These self images can change based on where we are and who we are with. Self image may be a lot different at home with family than it is at work for example.

Create products that enhance one of the self concepts. Research shows people try to influence most how others see them, so they buy products that are impressive to others. Leverage customer’s self concept for marketing. Marketers don’t just sell products, they shape the person inside. 

4. Consumer learning

Think about the last time you bought a car or perhaps a computer. Now think about the next time you will buy one of those items. Are you going to do it the exact same way as before? If you are like most consumers, the answer is probably not. Thats because you learn something from the first experience that will improve your purchasing behaviour on the next experience. As a marketer you need to understand how consumer’s learn. 

Help your consumers learn the following: Product knowledge, Brand knowledge, Purchasing knowledge, Consumption knowledge and Self knowledge.

5. Impact of reference groups

Consumers identify with certain groups and these groups called reference groups can affect a consumer’s purchasing behaviour positively or negatively. 

There are many types of reference groups consumers latch onto:

• Primary group: That’s your inner circle of family members and social friends. The people you see or talk to on a regular basis. 
• Secondary group: These are people you see only occasionally but you have some shared interest with them .
• Aspirational group: This is a group that you very much want to join or be associated with. These can definitely affect your purchase behaviours. As a part of self concept, you aspire to be in the same group and you adopt the same buying behaviours hoping you would get closer to that goal. Can be both personal and professional. 
• Dissociative groups: They are just the opposite from aspirational groups, because you definitely don’t want to be associated with them. 
• Formal groups: These are usually professional associations or organised clubs of some sort. People that belong to this group have a shared interest with you like playing golf at a golf club or learning about a specific topic in a professional group. 
• Virtual group: A group that is connected in some way through online. These people who might be complete strangers can affect your buying behaviours, especially with product reviews and recommendations. 

What does this mean to you as a marketer? You have to communicate to your target audience in a way that helps understand how your products or services affects their relationships in these reference groups. Marketing is not just about reaching one individual consumer, but leveraging the power of reference groups surrounding that consumer. 

Understanding purchasing behaviour

How do consumers buy?

There are 4 major phases involved in the buying process. Let’s look at each of them.

1. Need recognition : Consumers realise that they want something. It can be triggered internally, for example if a customer is thirsty, it will trigger a need for some kind of beverage. But it can also be triggered externally, through advertising or other stimuli. 
2. Information search: Customers collect information about solutions
3. Evaluate alternatives: Customers make choices based on 2 things: What’s most important? Which brand is best? The buying process doesn’t end here with the purchase, there is still one last step.
4. Post purchase behaviour: Customers compare results to expectations. This face is very critical as customers share their experiences with others based on their satisfaction. 

How to apply consumer behaviour in marketing?

We will use the classic marketing framework STP(Segmentation, Targeting and Positioning). Lets start with segmentation and targeting. This is the process of grouping customers that share at-least one common characteristic and focusing your marketing resource on them. Generally marketers use demographic or behavioural variables like age, gender or perhaps purchase frequency.

But with consumer behaviour insights you can segment market by attitudinal and aspirational variables such as learning behaviours, personality traits, self concepts and reference groups. For example imagine you are selling hand tools like hammers, screwdrivers. Instead of creating a segment such as “People, age 30 to 50 who live in suburbs”, you can create a more powerful segmentation like “Anyone who considers themselves a handy person”. How you position your products and services is perhaps the most important decision you make in marketing. 

Your positioning statement should offer benefits that appeal to the customer’s motivations and self-concept and possibly connect the customer to one of the reference groups.