The Effect of Consumer Behaviour in Marketing of an Organization
Even small businesses can conduct consumer research to determine which planning,
strategies and tactics a company should use to respond to changing marketplaces so that
they can continue to provide a unique selling differential, according to OmniConvert.
Consumer Behavior Affects Product Strategies
When consumer behavior changes, it can mean that customers want something new
and different or that they are spending less or more in a specific category. Businesses need
to look at their product lines to determine if they should drop obsolete products, add new
ones or change their features.
Consumer Behavior Affects Pricing Strategies
Some consumer behavior changes revolve around prices. For example, during a
recession, consumers have less to spend on discretionary purchases and spend more of
their budgets on staples such as food, clothing and utilities. Companies that make
discretionary items look to lower their prices during the recession, offer rebates, provide
free shipping, run buy-one-get-one-free deals, offer coupons or engage in downsizing.
During good times, consumers often spend their extra income on items they couldn't
afford before. Businesses might decide to add a higher-priced product to their lines, end
coupon or discount promotions, or raise their prices.
Consumer Behavior Affects Distribution
As consumer preferences for purchasing moved from driving to a store to ordering
online, businesses began selling online on their websites, added a third-party e-commerce
solution to their websites, or used third-party seller sites such as Amazon, eBay, Etsy or
Shopify.
Marketers must look at all the costs of selling using different methods, including fees,
shipping, warehousing and technology platform costs. As consumers move toward more
digital payments, businesses must deliver this payment option wherever they sell.
Consumer Behavior Affects Marketing Communications
When consumer behavior regarding content consumption changes, marketers must
change their advertising and public relations strategies. As consumers move away from
watching TV to getting more of their content online, marketers are spending less on
broadcast advertising and more on social media campaigns.
During the COVID-19 crisis, millions of workers stopped driving to work, which made
advertising on radio stations less effective. Advertisers looked for alternatives, such as
mailings to homes and using more social media.
Stay on Top of Trends
As a small-business owner, you should keep in touch with consumer behavior trends,
recommends DemandJump. To do this, conduct customer surveys, hold focus groups, read
trade association and industry research reports, and talk to your retail partners. With new
technologies debuting every month, remain especially watchful for disruptive products that
might make yours obsolete or a distance second-choice category.
Also, hold interdepartmental meetings with your marketing, sales, finance, IT and
distribution department heads to discuss how consumer behavior affects marketing strategy
for your company.
Normally, the demand for a product declines as its price goes up. Conversely, demand
increases as its price declines. However, other factors can cause the demand curve to shift
to either the right, which indicates increased demand, Change in Consumer Tastes or
Preferences
Changes in fashion are good examples of changes in consumer tastes. Styles of clothes
are constantly changing. Fashions that were popular in the '60s are no longer marketable to
today's consumers.
Changes in Prices of Related Goods
Sometimes, goods can be substituted for one another. A change in the price of one
good changes the demand for the other good.
Take ice cream, for example. If the price of ice cream drops, people buy more of it and
buy fewer candy bars. They satisfy their needs for sweets at a lower price. The demand
curve for candy bars shifts to the left.
The same process works for beef and chicken. When beef prices go up, people start
buying more chicken. The demand curve for beef shifts to the left as people buy less of it.
Changes in Buyers' Expectations
Buyers' expectations about future prices can affect the demand curve. If consumers
expect prices to increase, they buy more of a product now, and the demand curve moves to
the right.
On the other hand, if consumers expect a product to go on sale soon, they delay their
purchases, and the demand curve shifts to the right.
Implications of Changes in Demand Curves
Marketers pay attention to these four factors that affect demand. Changes in demand
curves have implications for pricing strategies, marketing campaigns and prod
or to the left, which indicates decreased demand. These factors represent
fundamental shifts in the marketplace. What Is Marketing?
Before you attempt to understand marketing concepts like environmental analysis and
marketing environment, it’s important to understand that marketing is not only advertising,
social media tweets and posts, public relations press releases and customer mailings. Those
are examples of marketing communications, the “fourth P” of the marketing mix of Product,
Price, Place and Promotion.
Marketing is the combined strategies and tactics of product development, pricing
strategies, distribution channels and marketing communications.
What Is Marketing Environment?
A marketing environment is the set of factors that affect how you make and sell
products or services, explains entrepreneur website Feedough. For example, during a
recession, the marketing environment might change in ways that include lower wages
(because more people are unemployed and are willing to work cheaper) or reduced sales
(because consumers have less to spend). When wages fall, you can make your product for
less and then sell it for less. When sales drop, you might need to lower prices, spend more
on advertising or add product features.
When a new technology enters the marketplace, it can change the marketing
environment if it makes your product or service obsolete or less desirable. Performing
comparative and competitive reviews of the marketplace are environmental analysis
examples.
New legislation can change the marketing environment, making it easier, more
difficult or more expensive for you to create, distribute and sell your products. Most things
that change the marketing environment are external factors, such as labor supply, laws,
competition, technology disruptions or increased costs of a material you need to make your
product. For example, fad diets, such as low-carb or gluten-free, can change the marketing
environment for pasta and bread companies.
The University of Minnesota business school identifies five external factors that affect
the marketing environment: political and regulatory, economic, competitive, technological,
and social and cultural.
What Is an Environmental Analysis?
In addition to looking at internal factors that affect your marketing, you should
perform an analysis of your marketplace and its environment. Internal factors that can
affect your business include the type of machinery and equipment you have, the age and
experience of your workforce, your location, and how much debt you have. These are
factors over which you have more control than environmental factors.
When you analyze environmental factors, you look at how external happenings affect
you. For example, if you are in an industry where consumers are increasingly buying your
products online, you need to analyze whether to close some or all of your brick-and-mortar
stores and spend money developing online sales channels.
Companies that made junk food for decades had to adapt to the growing consumer
demand for healthier foods, especially for children. This led to companies adding healthier
versions of their foods or new food lines.
If your area experiences an influx of young single residents, married couples with
children, or seniors, you probably need to adapt your product, pricing, distribution and
messaging for this new group of target customers.
