Consumer Behavior: Types, Theories, Models, Tools & Scope

Understanding consumer behavior is a key element of a robust marketing strategy. It plays a critical role in creating products and services that meet consumer needs. Knowing what consumers think, how they make decisions, and what drives them to purchase, is essential for a business to achieve growth. 

In addition, a deep knowledge of consumer behavior is important to tailor marketing efforts to specific segments and meet customer expectations. It’s also essential for creating offers that align with customer needs and preferences.   

More importantly, a business that understands consumer behavior can create unique value propositions and differentiate itself from competitors. From determining the right pricing to messaging to packaging, every key business decision is based on the understanding of consumer behavior. 

With more than 87% of customers starting product searches online, the time has come when more focus was put on understanding changing consumer behavior. 

In this blog, we will explore consumer behavior in detail and understand its types, importance, models, and theories. 

Before moving further, let’s understand the definition of consumer behavior…

What is Consumer Behavior? 

Consumer behavior refers to the actions and decisions that people or groups of people make in the selection, purchase, and use of a product or service. It’s a study of how people choose, use, and discard products and services, or engage with businesses or with the market.

Understanding customer behavior is a broad field that involves the detailed analysis of the set of decisions that customers make to meet their needs and wants. It’s also a field that analyzes the emotional, cognitive, and behavioral reactions of consumers concerning the buying decisions they make. 

Consumer behavior is a multidisciplinary field that involves insights from sociology, psychology, economics, and marketing to understand the basis behind the choices consumers make. All this analysis is important for businesses to anticipate and meet consumer needs by devising effective marketing strategies and tailoring their products or services. 

Importance of Consumer Behavior in Marketing

For marketers, understanding consumer behavior is essential to develop result-driven and effective strategies. A study of consumer behavior helps marketers create products that meet and exceed consumer needs. In essence, consumer behavior in marketing is a key concept whose knowledge is vital for knowing how consumers make decisions. 

Here is the importance of consumer behavior in marketing –   

Analysis of consumer needs and wants 

Consumers have unique tastes and preferences, and they are also characterized by different needs and wants. Those needs and wants can be social, functional, or emotional, either separately or sometimes together. 

Influence consumer decision-making process 

Consumers often take time and do some research before purchasing from a business. They search for information, evaluate the available options, and then reach a decision. Effective marketing strategies can influence consumer decisions and guide them through each of the steps. 

Study of internal and external factors influencing consumer behavior 

Consumer behavior is often shaped by a combination of internal and external factors. Marketing can help understand those factors better and ensure value propositions specific to consumer needs.  

Understanding consumer motivations 

All marketing efforts would stand for nothing if they were not aligned with consumer motivation and perception. Marketing has a key role in understanding how consumers perceive and respond to marketing stimuli.

Considerations of social and cultural influences on consumers 

Both social and cultural factors influence consumers on many levels. These factors have a big effect on how purchase decisions are made. Marketing is essential for analyzing and evaluating those needs. 

Predict consumer behavior 

There are various models for explaining how consumers make purchase decisions. These models offer frameworks for marketers to predict consumer behavior over time.   

Assessment of consumer loyalty and satisfaction 

Consumers show loyalty when they are satisfied with the product or service offered to them. It’s the role of marketers to understand and assess the post-purchase behavior of consumers and then cater to their needs. 

Why Understand Consumer Behavior? 

A business can grow and achieve success only when its products and services are well-accepted by consumers. Huge losses will happen to a company if customers don’t show interest in its offers. To avoid reaching that situation, it’s important to understand what customers want and how to meet their needs. This is where consumer behavior becomes important. 

Reasons are many why understanding consumer behavior is important, including –  

Effective Marketing Strategies 

A business can create effective marketing strategies only when it knows what motivates consumers and what influences their purchase decisions. 

Successful Product Development 

Product and service development should always align with customer needs and preferences. Only this can ensure success with product launches. 

Higher Levels of Customer Loyalty 

Delivering products and services that meet customer expectations often leads to a higher level of customer loyalty. 

Competitive Edge 

Companies that can respond to changing consumer preferences and trends tend to perform better and gain a competitive edge in the market.  

Proactive Measures 

Consumer behavior research is vital to identifying potential risks in the market which can prepare businesses to take proactive measures and address customer needs earlier than others. 

Customer Retention 

A business that aligns its strategies to consumer needs experiences higher levels of customer retention.   

Scope of Consumer Behavior 

Consumer behavior is a broad field that helps in the study and analysis of how people make buying decisions and what drives those decisions. It sheds light on various aspects related to consumers such as their preferences, motives, choices, etc. All this amplifies its field and widens its scope.  

The scope of consumer behavior can be vast and varied, including – 

Study the way people make purchase decisions

The major focus area of consumer behavior is to understand the consumer decision-making process and analyze the factors that drive the way people make purchases.  

Understand why consumers prefer one brand over another

This field is about analyzing the data related to consumer needs, how they make choices, what influences their decisions, and how they prefer one brand over another. 

Evaluate psychological, social, and cultural Influences on consumer behavior 

The scope of consumer behavior extends to the study of psychological factors, social and cultural Influences, and how they play a big role in shaping purchase decisions. 

Know customer attitudes and preferences 

Consumer behavior research is a key aspect of understanding consumer attitudes and preferences, and this research involves various ways such as surveys, experiments, and data analysis. 

Divide markets into groups for targeted marketing 

For businesses, understanding consumer behavior is central to dividing the market into groups and then leveraging targeted marketing efforts for specific preferences and needs. 

Measure the effectiveness of marketing campaigns 

The effectiveness of marketing, advertising, and promotional campaigns hinges on how well a business understands consumer behavior, or else its messaging may fail to evoke the kind of responses it expects.  

Learn about cultural and economic differences in consumers

The scope of consumer behavior also includes the analysis of how cultural and economic differences affect consumers and their purchase decisions in a globalized world.  

Assess the rate of tech adoption and innovation by consumers 

The rate of technology adoption and innovation is accelerated only when the industry has a deep understanding of consumer behavior and their readiness to embrace new things.     

Types of Consumer Behavior 

For a business, it’s very important to study different consumer behavior types and tailor their marketing strategies accordingly. This is the best way to meet consumer needs effectively and boost a certain degree of loyalty. However, consumers may exhibit different behaviors depending on the specific circumstances of each buying decision.  

 Here are the most common types of consumer behavior – 

Habitual 

When customers exhibit habitual buying, they make quick decisions, choose a brand over another without much thought, and hardly care about research. Such buyers either buy based on familiarity with a brand or are influenced by a lower price tag.  

Complex

This kind of behavior is generally seen in the purchase of an expensive product or service. Since the cost is high, consumers may research, read reviews, analyze features, consult friends or family, and compare with other options before making a buying decision. 

Dissonance Reducing 

This type of behavior is visible when buying expensive items or making risky purchase decisions. Because the cost is high, consumers tend to feel confused about their decision, so they may seek some kind of reassurance and feedback from others to reduce confusion. 

Variety Seeking

This type of behavior is visible in those customers who are variety seekers and like to switch between brands and products within a category. Since they are brand hoppers, they lack strong brand loyalty and rather prefer new experiences. 

Impulsive Buying 

This type of behavior is seen in cases where buyers make spontaneous and unplanned purchases. Emotions are the driving force in such behavior types where consumers may not seek much information or analysis. 

Brand Loyalty 

Some consumers show strong brand loyalty, consistently choosing a specific product or brand over others. This behavior is driven by a deep emotional connection to a brand.  

Analytical 

These types of buyers are quite methodical with their purchase decisions. They use data, facts, information, and logic to buy a product. They do deep research and analyze the pros and cons of their decisions before making a purchase. 

What Influences Consumer Behavior? 

Consumer behavior is a dynamic field influenced by many factors. The key for marketers is to understand those factors and serve customers better. Without knowing the factors affecting behavior, how can a business ensure value to its customers? 

Here are discussed the five key factors influencing consumer behavior – 

1. Psychological Factors

Human psychology has a big impact on the way consumers behave when it comes to making purchase decisions. These factors are never easy to measure but they do play a huge part in consumer behavior. These factors include – 

• Motivation – Every person has different needs, desires, and goals that can affect their purchasing decisions. 
• Learning – Consumer behavior and choices can evolve over time due to the information they collect and the experiences they gain regarding products or services.  
• Attitudes & Beliefs – Consumers have a set of beliefs and attitudes that shape how they choose or buy products. 
• Perception – How consumers perceive a product and how they look at the products can have a big say in their behavior.

2. Social Factors

The man is a social animal. Our life is very much influenced by the society we’re a part of. The choices we make, and the products we buy, all are shaped by imitating other people around us. More so, we have a yearning to fit in the surroundings and this shows how social factors influence our buying behavior. The three key social factors include –  

• Family – Our purchasing decisions are influenced a lot by the way our family buys products.  
• Reference Groups – The purchase decisions we often make are driven by the reference group we’re part of as people in these groups have a common pattern of purchase.  
• Roles and Status – The role and status we have in society are also significant determinants in our purchasing decisions. 

3. Cultural Factors

Consumer behavior is influenced by the culture and society they are part of. Consumers belonging to a set of values and ideologies may show slightly varying buying behavior compared to those belonging to different values and ideologies. Three main cultural factors are –  

• Culture – Consumers observe and learn behaviors, preferences, and values from the culture they are part of and this influences their purchase decisions.  
• Subculture – Subcultures exist within a cultural group and they consist of people from different ideologies and beliefs. This forms a type of customer segment and drives purchase decisions.   
• Social Class – Social class is a significant factor in determining and predicting consumer behavior as it’s made up of varied aspects such as income, occupation, education, family background, and residence location. 

4. Personal Factors

Every person is unique, and so are the choices they make and the buying decisions they make. This uniqueness is also shaped by various personal factors that contribute to the formation of different customer perceptions and choices. Some of the common personal factors are –  

• Age – Age is a significant factor in shaping buying behavior as we can see how youths often make different choices compared to middle and old-aged people.  
• Income – Purchasing power is shaped by income as consumers with a higher disposable income tend to spend on luxurious products while those with lower income focus more on meeting their basic needs. 
• Occupation – Most people tend to buy items or products that are in alignment with their profession.  
• Lifestyle – The kind of lifestyle we live or want to live determines the type of products we would buy.  

5. Economic Factors

Consumers have a higher purchasing power when the economy is strong. It shows how buying habits are also driven by the economic condition of a market or a country. Similarly, buyers experience a lower purchasing power in a weak economy.  

Key economic factors include – 

• The disposable income of the consumer 
• Country’s Economic Situation 
• Liquid Assets 

Theories of Consumer Behavior 

Consumer behavior is a complex field where any study needs to analyze and understand various perspectives. This has led to the development of several theories to tell consumer behavior in specific contexts. 

Here are some of the popular theories of consumer behavior –  

Theory of Planned Behavior (TPB) 

The Theory of Planned Behavior is based on the assumption that intention drives consumer behavior. It states that three factors —  attitude, subjective norm, and behavioral control— are key aspects behind a decision taken by a consumer. 

Maslow’s Hierarchy of Needs

Maslow’s Hierarchy of Needs is a popular psychological theory that suggests consumers have different levels of needs and they gradually prioritize and hierarchically meet these needs. They progress up the hierarchy in a gradual manner as lower-level needs are met. 

Cognitive Dissonance Theory

The Cognitive Dissonance Theory suggests that individuals feel dissonance when their attitudes conflict with their actions. In consumer behavior, consumers experience dissonance after a purchase when they question the decision. 

Social Cognitive Theory (SCT) 

The Social Cognitive Theory is based on the idea that people influence one another through persuasion. It suggests our thoughts, feelings, and actions are driven and regulated by various cognitive processes such as attention, memory, knowledge, and perception.   

Popular Consumer Behavior Models 

Companies often use consumer behavior models to understand how consumers may react in a certain market and how they respond to certain products, pricing, and product features and advertisements. These models are very helpful in making certain marketing or business development decisions.  

Here are some of the popular consumer behavior models – 

1. Psychological or Learning Model

This model is based on Maslow’s hierarchy of needs which says buyer behavior often corresponds with the desire to feel basic needs and meet emotional requirements. This model suggests that people often address their basic needs first before moving ahead to fulfill their psychological needs.  

2. Sociological Model

The model states that a person typically purchases items that align with their values or expectations. It also states that purchasing habits are also influenced by buyers’ social standing. So, a business can benefit from this model by creating experiences based on the class of people who typically buy the products. 

3. Psychoanalytical Model

This model states that every buyer possesses conscious and unconscious motives that often drive their purchase decisions. This model is based on a psychological theory developed by Sigmund Freud that is meant to understand human behavior and personality. The main focus of this model is on the unconscious mind and how it affects a buyer’s thoughts, feelings, and behaviors.

4. Economic Model

This model states that consumers will first evaluate the value of a product compared to its price and then buy the most value-driven item available to them. Price, substitution, and income are the three key concepts that drive this model. 

5. Engel-Kollat-Blackwell (EKB) Model

The EKB model outlines five stages in the decision-making process of most consumers as these stages are what many follow before buying an item. Awareness, Information Gathering, Evaluation, Decision, and Outcome Analysis are the five stages suggested by this contemporary model.

6. Howard Sheth Model

This model is based on the assumption that the buying decision is driven, and affected, by certain variables. These variables are the reasons why buyers solve their problems and make the relevant buying decision. The four most common variables in this model include inputs,  Perceptual Constructs, Outputs, and External Variables. 

7. Black Box Model 

This model states that most consumers respond to stimuli when making purchases. A buyer internalizes an external stimulus, processes it, and compares it to their interests to make a buying decision. As per this model, most consumers purchase items only after understanding how they can add value to their lifestyle. 

How to Study Consumer Behavior? 

Data is key when it comes to understanding how consumers make purchase decisions, or how they engage with the brand or with products or services. There are various methods to collect data on consumer behavior, study consumer behavior, and understand their motivations regarding purchase decisions. 

Let’s look at various methods to study consumer behavior – 

Surveys and Questionnaires 

Most brands rely on surveys and questionnaires to collect key quantitative data on consumer behavior. These methods are very helpful in collecting data on demographics, habits, and preferences, and can be used via online channels or in-person.  

Interviews 

Interviews have always been among the most effective methods to collect data on consumer behavior. They are extensively used for gaining qualitative data and getting deep insights into their thoughts, motivations, experiences, and preferences.  

Focus Groups

For many top companies, focus groups remain a very powerful tool to collect data on consumer behavior. In this method, a small group of consumers are brought together to discuss their experiences and understand their perceptions and attitudes about the brand. 

Observational Study 

There is no better method than an observational study to collect data on the actual behaviors of consumers. In this method, consumers are observed in real-life settings such as in public spaces or at retail stores and data is collected.

Customer Feedback and Reviews 

Customer reviews and feedback are very helpful forms of data on consumer behavior. They are also among the easiest to gain with the least possible effort on the part of marketers. The key is to encourage customers for feedback and reviews so that you can know the areas for improvement. 

Purchase and Sales Data 

Many businesses rely on sales and purchase data to analyze consumer behavior, buying patterns, market trends, and other key aspects.

Customer Behavior Segmentation 

Segmenting customers has always been a key aspect of marketing. It helps businesses understand customers and their buying behavior better. When we segment customers, we divide a customer base into groups that share similar traits and behaviors. This approach proves helpful in meeting the needs of each segment. 

Let’s look at the types of customer behavior segmentation that your business can do – 

1. Purchase Behavior Segmentation

This traditional type of segmentation helps businesses group customers based on their buying habits and purchase frequency. Using purchase behavior segmentation helps identify specific patterns such as whether buyers are seasonal, impulsive, or loyal.   

2. Usage-Based Segmentation

This segmentation is done to assess the frequency at which customers use a product or service. When customers are segmented based on usage, it helps businesses know among heavy, frequent, and infrequent users. 

3. Benefits Sought Segmentation 

This type of segmentation helps understand what specific benefits customers prioritize when buying products or services. Based on this segmentation, a business can consider improving its features or benefits for customers.   

4. Timing-Based Segmentation 

This type of segmentation helps businesses identify the best times for purchases by customers. Here, segmentation is done based on occasions or events such as holidays or birthdays, to understand consumer behavior patterns. 

5. Loyalty-Based Segmentation 

In this segmentation, customers are grouped based on their loyalty to a brand. It helps businesses identify customers who are more likely to do repeat purchases, or more likely to churn. Based on the segmentation, companies can pay more attention and incentives to customers who are more likely to purchase.  

6. Customer Journey Stage Segmentation

This segmentation groups or divides customers based on their journey stages with a brand. Since customers in different journey stages display varied traits, this segmentation thus becomes helpful in identifying opportunities for each stage. 

Top Consumer Behavior Analysis Tools 

A business needs lots of data and information to understand customer preferences and other key details. However, finding relevant quantitative data on customer behavior is not easy unless you use some quality tools. 

Let’s look at top consumer behavior analysis tools for businesses – 

1. REVE Chat 

REVE Chat is a feature-rich consumer analysis tool that gives deep insights into customer behavior and preferences in real time. While it’s an omnichannel live chat platform, it provides tons of tools for customer engagement that eventually drive conversions and experiences. 

Using the tool, businesses can get actionable data from different channels. REVE Chat also provides detailed behavioral analytics and automated insights. Its features can be used to optimize customer engagement and analyze behavior across touchpoints. 

Key features

• Real-Time customer insights
• Behavioral analytics
• AI chatbots for automated data collection  
• Integration with multiple engagement channels  
• Customer sentiment analysis  

2. Mixpanel

Mixpanel is a robust analytics platform that empowers businesses to gain valuable insights into how users engage with their products or services. This platform is key to analyzing user interactions on any app or website. You can leverage the features of this platform to improve customer conversion and strengthen your retention strategy. Plus, it uses an event-based tracking system that ensures detailed reports on users. 

Key features 

• Event tracking
• Retention analysis & Cohort analysis
• A/B testing
• User segmentation
• Real-time analytics 

3. Mouseflow 

Mouseflow is a web analytics tool that can help in customer behavior analysis. This tool is used for recording and analyzing website interactions. Businesses can leverage its features to gain insights into how users engage with their websites and navigate different elements. Based on the analysis, it becomes easy to optimize user experiences and fix issues in real-time. 

Key features  

• Session recording
• Heatmaps
• Form Analytics
• Funnel analysis
• Feedback surveys
• User segmentation 

4. Google Analytics 

Google Analytics is a powerful and feature-rich analytics platform that offers a suite of features or tools for customer behavior analysis. It’s one of the best available tools for getting deep insights into user demographics and behavior flow. It’s a robust tool for analyzing and enhancing the online experience for users. It enables real-time monitoring so that businesses can get deep insights into user activity by the second. 

Key features

• Event tracking
• Conversion tracking
• E-commerce tracking ‍

5. Hotjar 

Hotjar is one of the most widely used tools for customer behavior analysis. It’s a robust web analytics and feedback tool that provides deep insights into how users navigate a website. Using the “Session Recordings” feature, it’s possible to get a playback of individual user sessions. Similarly, the tool gives a good knowledge of user navigation patterns and behaviors on the website. It also helps businesses collect direct feedback from users. 

Key features 

• Heatmaps
• Surveys
• User feedback collection 

Consumer Behavior: Key Takeaways 

Understanding consumer behavior sets the foundation for growth and success for most businesses. It also helps create products, services, and offers that align with customer needs. 

We also discussed the definition of consumer behavior and its importance in marketing. We saw how businesses can gain a lot by understanding customer behavior and driving profits.  

The blog also touched upon the scope of consumer behavior together with discussing its types. There was a detailed analysis of what influences consumer behavior, including – 

• Psychological Factors
• Social Factors
• Cultural Factors
• Personal Factors
• Economic Factors

The blog also delved into various theories of consumer behavior, including, the Theory of Planned Behavior (TPB), Maslow’s Hierarchy of Needs, Cognitive Dissonance Theory, and Social Cognitive Theory (SCT). Similarly, we discussed popular models of consumer behavior and learned how to study the behavior of consumers methodically. 

In the end, we also focussed on customer behavior segmentation and its type before concluding the blog with the top tools for consumer behavior analysis. 

With REVE Chat, you can sign up and find a top tool to analyze customer or user behavior in detail and get detailed analytics.  

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