Consumer behavior is the study of when, why, how, and where people do or do not buy a product. It blends elements from psychology, sociology, social anthropology and economics. It attempts to understand the buyer decision making process, both individually and in groups. It studies characteristics of individual consumers such as demographics and behavioral variables in an attempt to understand people's wants. It also tries to assess influences on the consumer from groups such as family, friends, reference groups, and society in general.
Customer behavior study is based on consumer buying behavior, with the customer playing three distinct roles of user, payer and buyer. Research has shown that consumer behavior is difficult to predict, even for experts in the field.
Relationship marketing is an influential asset for customer behavior analysis as it has a keen interest in the re-discovery of the true meaning of marketing through the re-affirmation of the importance of the customer or buyer. A greater importance is also placed on consumer retention, customer relationship management, personalization, customization and one-to-one marketing. Social functions can be categorized into social choice and welfare functions.
Each method for vote counting is assumed as social function but if Arrow's possibility theorem is used for a social function, social welfare function is achieved. Some specifications of the social functions are decisiveness, neutrality, anonymity, monotonicity, unanimity, homogeneity and weak and strong Pareto optimality.
No social choice function meets these requirements in an ordinal scale simultaneously. The most important characteristic of a social function is identification of the interactive effect of alternatives and creating a logical relation with the ranks. Marketing provides services in order to satisfy customers. With that in mind, the productive system is considered from its beginning at the production level, to the end of the cycle, the consumer.
The implications of this process helps develop an effective promotional strategy, and choose the most effective sources of information for the brand.
- Selective exposure consumers choose the promotional messages they will expose themselves to.
- Selective attention consumers choose the messages they will pay attention to.
- Selective comprehension consumer interpret messages in line with their beliefs, attitudes, motives and experiences.
- Selective retention consumers remember messages that are more meaningful or important to them.
Information evaluation: At this time the consumer compares the brands and products that are in their evoked set. How can the marketing organization increase the likelihood that their brand is part of the consumer's evoked set? Consumers evaluate alternatives in terms of the functional and psychological benefits that they offer.
The marketing organization needs to understand the benefits consumers are seeking and which attributes are most important in terms of making a decision. It also needs to check other brands the customer is considering to prepare the right plan for its own brand.
Once the alternatives have been evaluated, the consumer is ready to make a purchase decision. Sometimes purchase intention does not result in an actual purchase. The marketing organization must facilitate the consumer to act on their purchase intention. The organization can use a variety of techniques to achieve this.
The provision of credit or payment terms may encourage purchase, or a sales promotion such as the opportunity to receive a premium or enter a competition may provide an incentive to buy now. The relevant internal psychological process that is associated with purchase decision is integration. Once the integration is achieved, the organization can influence the purchase decisions much more easily. There are 5 stages of a consumer buying process they are:
- The problem recognition stage, meaning the identification of something a consumer needs.
- The search for information, which means you search your knowledge bases or external knowledge sources for information on the product.
- The possibility of alternative options, meaning whether there is another better or cheaper product available.
- The choice to purchase the product.
- And then finally, the actual purchase of the product.
This shows the complete process that a consumer will most likely, whether recognisably or not, go through when they go to buy a product.