Understanding consumer behavior: how to influence the decision-making process
Javier Ramirez
Liberty University
BUSI 520: Strategic Marketing Management
Muriel Wilson
January 9, 2022
Understanding consumer behavior: how to influence the decision-making process
What is Consumer Behavior?
The study of consumer behavior is concerned with how individuals and
organizations make purchases and support brands. Behavior, motivations, and psychology
are the main areas of study in this field. The important thing to know is that the buying
journey is composed of countless small and large consumer behaviors that can be
influencaed to make the final buying decision in the best interests of both the consumer and
the product or service provider. Consumer behavior is at the root of the consumer decision-
making process, and so it must be clearly understood, defined and acted upon across all
service interactions.
Why is Consumer Behavior so important?
Consumer behavior defines what channels the consumer will go through on their
way to making a buying decision. What is so important - and interesting - about consumer
behavior is that everyone arrives at decisions in their own unique way. But it's not so unique
that it can't be studied and predicted. It puts the onus on product and service providers to
do the research and understand their target market and their respective consumer
behaviors.
It's actually the decision-making process that must be understood and leveraged,
and consumer behavior goes hand-in-hand with that. Consumer behavior is the process.
When a consumer embarks on the buying journey, they exhibit certain behaviors. They
think, feel and take action. These thoughts, feelings, and actions can be "helped along" or
guided. It is the understanding of consumer behavior that enables a product or service
provider to help the consumer make a satisfactory choice.
Improve marketing and communication
Understanding consumer behavior enables a product or service provider to
improve marketing and communication. For example, a company that makes sports
equipment may have identified that their customers are more likely to purchase their
products online than in-store. They can then use this information to improve the way they
market their products online.
Improve consumer retention rates
Understanding consumer behavior can help a product or service provider identify
growth opportunities and develop strategies to improve customer retention. It's also a great
way to identify any problems that may be impacting their business, such as an outdated
website or slow response times from customer support teams.
Increase consumer loyalty
By understanding their consumers, businesses can create a product tailored to their
specific needs. This will increase customer satisfaction, which in turn leads to increased
loyalty, or even advocacy.
Improve perception of customer service
Customer service is an important part of any business, and understanding
consumer behavior can help businesses offer better service. By understanding how
consumers behave, businesses can make changes that will improve customers' perception
of their brand. For example, if a large number of customers call in to complain about late
deliveries, you might want to investigate why that is happening. You may discover issues
with your shipping times or delivery routes. Once you've identified the problem, you can
take steps to fix it so that your customers get their products on time.
Better predict trends in consumer behavior
Understanding consumer behavior is a crucial part of running a successful business.
Companies need to know what consumers want, when they want it and where they can find
it. Understanding how consumers behave can help businesses better predict trends in the
market, allowing them to make better-informed decisions about how to operate their
companies. Companies that understand the needs of their consumers will be able to provide
products and services that are more in line with what those consumers want. This can lead
to increased sales and brand loyalty from loyal customers.
For example, suppose you're running a restaurant chain and you know that your
customers prefer takeout over dining-in experiences, in that case, you could use this
information to determine where you should open new locations and how many tables you
need at each location (or whether or not your current number of seats is sufficient). You
could also use this knowledge to determine which menu items should be offered as takeout
options versus dine-in options based on what your customers want most often.
Increase ability to stay relevant
Businesses can use consumer behavior to stay relevant by understanding how
consumers interact with the business and how that can be improved. For example, if you're
a restaurant and you notice your customers tend to buy more food when they're seated on
the left side of the restaurant, you could move all of your tables there. Or if you notice that
people are buying more dessert when it's served on a smaller plate, you could increase the
size of the plates—or even change the type of desserts you serve! These types of
adjustments help businesses stay relevant because they keep customers happy while also
allowing to continue making money.
Increase sales
Understanding consumer behavior is a valuable tool for product and service
providers. It enables them to increase sales by identifying their target market, determining
the needs of that market, and developing products and services that meet those needs.
Innovate attractive new services and products
It's not enough to simply create a product or service and hope customers will buy
it. If you're an entrepreneur, you need to understand what your customers want and how
they behave. You also need to know when they'll buy, how they'll buy and how much they'll
spend on what you're selling.
This information helps you create innovations that are attractive to consumers.
When you know your target audience's needs and wants, you can innovate new products or
services that meet those needs better than your competitors' offerings. You can even make
them more appealing than other alternatives available in the marketplace.
The key factors that affect consumer decision making
Consumer behavior is influenced by certain key factors. These include personal,
psychological, social and situational factors. These factors can be permanent or temporary,
but they all affect consumer decision-making, either one at a time or in unison with one or
more of the others. In other words, a consumer's decision may be affected by a single
factor, all the factors, or in a group with two or more others. Following are examples of each
kind of influence as they relate to the hospitality industry:
Personal influences on Consumer Behavior
Personal influences on consumer behavior include demographic factors, personality
traits, and other personal characteristics that influence how people respond to products and
services. For example, a consumer may prefer a certain restaurant because they offer
kosher meals on the menu, have more soup offerings or because the consumer is a senior
and the restaurant offers a senior discount.
Psychological influences on Consumer Behavior
Psychological factors include the consumer's perception of their needs, mindset,
and perception of the provider and its services and/or products. For example, a consumer
may perceive that a certain venue has a higher standard of service than a different one. For
that reason, they would choose that venue over another to hold their daughter's wedding
reception.
In a negative connotation, a consumer may avoid a particular restaurant in town if
they feel that the waitstaff has what they perceive as a snobby "attitude." Note that while
one consumer may appreciate an upscale environment, another may make the opposite
buying decision based on that same perception.
Social influences on Consumer Behavior
This factor includes social influences. It can be an existing social circumstance or a
social circumstance that the consumer aspires to. These include family and friends,
acquaintances, and - due to social media - perfect strangers online.
Social influences on consumer behavior can originate from many sources:
Online recommendations
Online comments on social forums
Family and friends' recommendations
Private conversations
Chance comments/overheard conversations
Celebrity/influencer behaviors and choices
Desire to rise above current social status
A common example of a social influence would be if a Facebook friend posted a
picture of their meal and remarked how delicious it was. Then the consumer has both a
visual trigger and the recommendation, both of which will influence where they choose to
dine the next time they eat out.
Situational influences on Consumer Behavior
Situational influences are most often temporary in nature, but they can be long-
lasting. For instance, a situational influence can include where a consumer resides. If they
live in a tourist town, they may be more likely to invite friends and family to visit frequently.
In the short term, a situational influence might be if a consumer is seeking to get away from
the cold weather where they live and travel to some exotic, beachy locale. Other situational
influences include holidays, time and moods of the consumer.
Types of Consumer Behavior
The type of behavior that a consumer engages in is determined by what kind of
service or product the consumer needs, the level of involvement they have in the decision-
making process, and the differences that exist between the consumer's choices. Here are
the various types of consumer behavior:
Habitual buying behavior
Consumers' habitual buying behavior is the pattern of their purchasing decisions.
When people are comfortable with a product and the associated brand, they tend to buy
that product again and again. It is also common with brand-loyal consumers who
automatically go to the same travel hotel or always choose the same item off the menu.
Variety-seeking behavior
This is marked when a consumer seeks variety and purposely chooses different
venues or products simply to introduce new things into their lives. For example, this type of
consumer might be easily influenced by what a fellow diner is having.
The appeal of variety-seeking behavior is twofold: first, it allows consumers more
options within the same product category; second, it introduces them to new products they
might not have otherwise tried.
Dissonance-reducing buying behavior
This is when the consumer is heavily involved in the decision-making process and
conducts lots of research beforehand. Ultimately, the consumer experiences difficulties
making a final determination because they are worried about the buyer's remorse.
Complex buying behavior
This type of behavior is exemplified by a consumer making a decision that they
perceive to be complex. Typically, it is a decision that involves several factors. An example
would be a consumer trying to decide on a vacation resort where several family members
will be joining them. Each family member must be satisfied with the choice, and the venue
must meet each member's criteria, so the chances for error are high, according to the
consumer's perception.
How to collect data on consumer behavior
Determining how consumers will behave in a certain circumstance is easier when
there is data to draw from. Consumer behavior data will include past behavior patterns,
thoughts and feelings about brands, and thoughts about past experiences.
There is a multitude of research methods to collect consumer behavior data. They
can be used independently or with each other in various contexts. Some of the most
common data collection methods with regard to the hospitality industry are:
Customer feedback: Reading comments left by your customers can highlight
recurring problems or desires. An example would be to leave comment cards on restaurant
tables or by the door.
Opinion sites: There are third-party websites that hire people to review brands and
websites and offer their objective opinions. These can be helpful in collecting data on brand
perception in an anonymous way.
Surveys: Online surveys gather consumer opinions and can be done in a fun way.
Many social platforms, such as Facebook, make it easy to create what they call "polls."
Focus groups/online panels: A focus group is a more organized method to discover
what consumers feel and think about. They are most useful for specific services or products,
such as a new menu item.
The consumer decision-making process steps
The consumer decision-making process is also widely known as the buyer's journey.
The steps in the consumer decision-making process are the same, no matter what the
consumer is ultimately buying. In other words, the steps are true whether the consumer is
buying a milkshake or a timeshare.
Awareness
In this first stage, the consumer first becomes aware that they have a problem. The
problem is not a problem in the traditional sense of the word; rather, it's a need for
something. That need could be a venue to hold their child's birthday party, a meeting place
for a board meeting, or the need to choose something from a menu in order to satisfy their
desire for something to eat.
Consideration
In this stage, the consumer feels and thinks about ways to solve their "problem."
They are thinking about what they need, perhaps even making a list of criteria that they
need. They are open to possibilities in this stage. They are informing themselves and
learning about possible solutions to their problem. They might be perusing the drinks menu,
asking friends for recommendations, looking at online reviews, browsing a region on Google
Maps, clicking through a website, or conducting other kinds of research in order to inform
themselves, so they can make what they hope is a good decision.
Decision
In this stage, the consumer homes in on their final choice. They will be eliminating,
ruling out certain options that don't suit their needs. They are evaluating the hospitality
provider, weighing the pros and cons of their choices.
Consumer behavior trends
Consumer behavior trends are the changes in consumer behavior over time. These
trends can be modeled by looking at the data points of consumer spending, which is a
significant component of the economy. As technology advances and consumer lifestyles
change, these trends help us predict how consumers will behave in the future.
The latest consumer behavior trends informing decisions in 2022 are:
Transparency
Consumer demand for transparency in the businesses they support has increased.
Consumers are more likely to do business with companies that align with their personal
beliefs and values.
Online purchases
Even before the pandemic, consumers were gravitating more toward online
purchases, making reservations and booking hotels via their devices. The pandemic grew
this trend exponentially and the travel industry is springing back unexpectedly quickly post-
pandemic.
Concerns about online security
More consumers are concerned with their online privacy and more aware of online
security's potential dangers. Companies that emphasize consumer online security are
looked upon more favorably.
Preference for eco-friendly companies
Climate change is top of mind with consumers, and they are more likely to do
business with companies that practice eco-friendly behaviors.
Personalization and customization
Consumers want to feel like they have a unique experience, and they're more likely
to buy when they feel like the product is being made just for them.
