Definition of Consumer Behavior and Marketing Implications

The basic belief of marketing-oriented company is that the customer is the hub around which the business revolves. Therefore, understanding what makes people in general buy and what makes your customer in particular buy, is a vital part of business success. Market itself means – customer, around whom all marketing strategies are formulated and implemented. In order to meet competition at the market place, the marketing managers are using various methods to add value to the final product which will reach the hands of the consumers. It means in ever changing marketing environment, there is a growing concern or awareness among marketers to go for a careful study of the consumer behavior around which all marketing activities are made. Following are the key marketing implications of consumer behavior.

Consumer Behavior and Marketing Strategies

Understanding the consumer behavior is the basis for marketing strategy formulation. Consumer’s reaction to strategy determines the organization success or failure. In this competitive environment organizations can survive only by offering more customer value - difference between all the benefits derived from a total product and all the costs of acquiring those benefits - than competitors. Providing superior customer value requires the organization to do a better job of anticipating and reacting to the customer needs than the competitor. Marketing strategy is basically the answer to the question: How will company provide superior customer value to its target market? The answer to this question requires formulation of marketing - mix – product, price, place and promotion - strategies. The right combination of these elements meets customer expectation and provides customer value. For example, marketer of a bike must know the customers performance expectations, desired service, price willing to pay, information he seeks and after-sales service to provide superior customer value.

Consumer Behavior and Market Segmentation

The most important marketing decision a firm makes is the selection of one or more segments to focus their marketing effort. Marketers do not create segments but they find it in the market place. Market segmentation is the study of market place in order to discover viable group of consumers who are homogeneous in their approach in selecting and using goods or services. Since market segment has unique needs, a firm that develops a product focusing solely on the needs of that segment will be able to meet the target group desire and provides more customer value than competitor. For example, right segment for ‘Femina’ magazine is educated urban women. The success of this magazine depends on their understanding of the urban woman.

Consumer Behavior and Product Positioning

Product positioning is placing the product, service, company, or shop in the mind of consumer or target group. Through positioning marketers seek the right fit between a product and desired customer benefits. The right positioning means understanding the consumer perception process in general and perception of company’s product in particular. For example, Samsung brand is perceived as premium brand by few customers and value-driven brand by others in the market, but marketer must find out what makes their target market to perceive differently and position it accordingly.

Consumer Behavior and Marketing Research

Studying consumer behavior enables marketing researchers to predict how consumers will react to promotional messages and to understand why they make the purchase decision they do. Marketers realized that if they know more about the consumer decision making criteria, they can design marketing strategies and promotional messages that will influence consumers more effectively. The importance of consumer behavior made marketers to think of a separate branch in marketing research - Consumer research, to deal exclusively for consumer related issues. The current focus of consumer research is on study of underlying needs and motives in taking purchase decisions, consumer learning process and attitude formation process.

Consumer Behavior and Non-Profit and Societal Marketing

A sound knowledge of consumer behavior can help the organizations that sell ideas and concepts of social relevance. Institutions that promote family planning, AIDS free society, governmental agencies, religion orders and universities also appeal to the public for their support in order to satisfy some want or need in society. The knowledge about potential contributors, what motivate their generosity, how these motives can be effectively appealed is useful for the organizations involved in these activities.

Consumer Behavior and Governmental Decision Making

Two major areas where consumer behavior study helps government is in policy making on various services, and in designing consumer protection legislation. The knowledge of people’s attitudes, beliefs, perceptions and habits provides adequate understanding of consumers.