What is an example of consumer psychology?

It used to be that leads only had to be contacted seven times, on average, before making a purchase decision. But since 1997, Internet advertising has increased by more than 6,000 percent. A typical adult gets bombarded by thousands of ads every single day, and recent studies have shown that a sales sequence now requires at least 12 to 14 connections in order to be effective.

So, how do you make sure your marketing efforts stand out? The secret to successful selling comes from knowledge. Knowledge is power, and you need to understand exactly who your prospects are and how they behave to turn leads into customers.

In this guide, we’ll define consumer behavior, explore its principles, and provide clear examples. With a comprehensive consumer behavior model that illustrates how your customers think and why they buy, you’ll be able to construct personalized marketing campaigns that can achieve the improbable: transforming apathy into brand loyalty.

What is consumer behavior?

Consumer behavior is the study and analysis of consumer buying habits in marketing. It seeks to answer the age-old question: “Why do people choose to buy the things they buy?” Consumer behavior is often informed by an individual’s personality, psychology, social sphere, demographics, culture, environment, and marketing influences.

Deciphering consumer behavior helps businesses better understand and connect with the individuals who matter most to their success: the customer.

Getting to know the buyer

Before you can understand your buyers’ behavior, you need to know who they are. But you can’t take every buyer out for a cup of coffee. Instead, you’ll study and segment your average customers through market research and direct feedback, then carefully construct a buyer persona (or several) from the collected information.

A buyer persona is a semi-fictional, idealized version of your typical customer. This buyer travels through the sales funnel at a perfect pace and ticks all the boxes for a qualified lead. But your buyer persona does more than that. Because when you understand the wants, needs, and hang-ups of your buyer persona, you’ll also be diagnosing the pain points and identifying the objections of a large swath of your customer base.

With this information at your fingertips, it’s easy to create targeted, effective content and marketing materials. And one of the ways to understand your buyer persona (and therefore significant segments of your actual customers) is by examining how and why they might engage in predictable consumer behaviors.

Types of consumer behavior

The study of consumer behavior requires an understanding of both business and psychology. After all, how and what people decide to purchase can be influenced by everything from how well they slept last night to what’s trending on their Twitter feed.

There are several types of behavior that consumers generally engage in. According to a model developed by NYU Stern’s Henry Assael, buyer behavior can be broken down into four specific types:

• Complex buying behavior
• Dissonance-reducing buying behavior
• Habitual buying behavior
• Variety seeking behavior

Each type of behavior depends on two variables: how involved a buyer is in the purchase and how many differences there are between brands or products. Getting in tune with these variables gives you a clearer sense of how leads interact with your product as they progress through the customer journey.

Complex buying behavior

Buyer involvement: High
Brand difference: High

Complex buying behavior often occurs with high-stakes purchases like a new home, car, or computer. If the buyer is simultaneously spending a significant amount of money while choosing between brands with notable differences—Ford or Tesla, Apple or Android—they will likely feel the need to conduct in-depth research and therefore will be highly involved in the process.

Dissonance-reducing buying behavior

Buyer involvement: High
Brand difference: Low

Dissonance-reducing buying behavior occurs when a buyer is highly involved in their purchase, but the differences between brands are few or there are not many brands to choose between. These types of purchases are generally less frequent and more expensive, such as purchasing a music stand, coffee maker, or snowblower. A buyer is likely to worry whether they’re making the right choice—hence the dissonance.

Habitual buying behavior

Buyer involvement: Low
Brand difference: Low

When a buyer perceives few differences between brands and they have low involvement in the purchasing decision, they are engaging in habitual buying behavior. Typically, these purchases are for everyday items. A buyer doesn’t put a lot of thought into which sea salt or green tea is going into their shopping cart. They may choose based on convenience, availability, brand loyalty, or lowest price—but whatever their influence, they’re not spending much time researching their purchase.

Variety-seeking behavior

Buyer involvement: Low
Brand difference: High

Customers will engage in variety-seeking buying behavior, but it’s not necessarily because they are dissatisfied with a product. They might be bored and/or want to try something new. Involvement with the purchase is low, in part because it’s not high stakes to try a new scented hand soap or different type of breakfast cereal.

Understanding how consumers lock into these variables of buyer involvement and brand difference means you can be in step with them through their customer journey. Meanwhile, your sales team can respond effectively to the type of behavior your buyers engage in.

Consumer behavior theory

Companies desperately want to understand the ways that customers interact with their products, services, and marketing. After all, identifying the what and why of consumer behavior is the secret to selling more consistently, rapidly, and in greater amounts.

Various consumer behavior theories throughout history have combined ideas from economics, psychology, sociology, anthropology, biology, and chemistry. Here are five of the main schools of thought which govern consumer behavior theory.

1. Psychoanalysis

   Sigmund Freud’s psychoanalytic theory asserts that consumers’ unconscious psychological impulses shape their purchasing behavior. These impulses include a person’s hidden desires, fears, motives, or aspirations.

2. Socio-psychology

   Thorstein Veblen’s socio-psychological model posits that a consumer’s social and cultural background are the most important factors that influence their purchasing behavior. Rather than fulfilling basic needs, consumers are driven more by a need to maintain social class, income, and cultural or subcultural prestige.

3. Reasoned action

   According to the theory of reasoned action (TRA), a consumer assesses a product or service. If they have a positive attitude about it and they believe that people in their social group will also approve, they are more likely to make that purchase.

4. Impulse buying

   Hawkins Stern’s theory of impulse buying, first advanced in 1962, considers the confluence of internal and external forces an individual experiences during the purchasing process. Instead of relying on their own careful thought or consideration, an individual making an impulse buy is more likely under the influence of external forces, like discounts, promotions, peers, or service quality.

5. Maslow’s hierarchy of needs

   Stern’s theory was a direct argument against Abraham Maslow’s hierarchy of needs theory from the early 1940s. Maslow’s hierarchy argues that humans prioritize needs in a particular order: psychological or survival, safety and security, love and belonging, self-esteem, and self-actualization. In terms of consumer behavior, an individual will prioritize needs according to the hierarchy.

   While each of these theories addresses different aspects of a buyer, they’re all working to accomplish the same thing: making sense of how consumers behave. And they all have a few basic consumer principles in common that can apply to any individual.

Consumer behavior influences

Like molecules of water in the sea, individual behaviors are limitless. However, by creating buyer personas, your marketing and sales teams are acknowledging and taking advantage of the fact that most behaviors are guided by broader currents. We can boil down every individual consumer’s influences to three basic areas: personal, psychological, and social.

Personal factors

A customer’s buying behavior has a lot to do with their personality. Are they outgoing or reserved? Quick to joke or quite sensitive? In addition to temperament, a buyer’s interests and opinions can influence their purchasing behavior. In turn, demographics such as age, locale, culture, gender, profession, or level of education can influence an individual’s interests, preferences, morals, values, and opinions. An individual buyer persona’s purchasing power also matters. If they can’t afford your product or service, they’re probably not going to commit to that purchase.

Psychological factors

Consumers respond differently to marketing campaigns depending on their psychological makeup. This includes their general outlook on life, motivations, attitudes, and perceptions. These factors are highly variable, often changing from day to day, so they’re particularly challenging to predict.

Social factors

Consumers’ social groups also affect how they shop. Peer pressure or group influence from immediate family, friends, classmates, or colleagues can play a significant role in purchasing decisions. Social factors extend to a person’s economic class as well as their social media practices. An individual’s presence on various social media platforms can expose them to fads and trends that may influence their buying behavior.

Consumer behavior patterns

An individual’s pattern of behavior can influence how they make purchases. To discern what any singular buyer’s patterns are, you need answers to:

• What and how much do they purchase?
• How often do they buy?
• Where do they make their purchases?
• What’s their preferred method to make purchases?

By identifying clear patterns of behavior, your marketing team can formulate a well-crafted buyer persona. And your sales team can employ that buyer persona to whisk a real-life buyer through the pipeline.

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Why is consumer buying behavior important?

Cracking the code of consumer buying behavior allows businesses to understand why customers are making the purchases they do. This helps companies sell their products, develop new ones by identifying gaps in the market, and even discontinue what’s become passé.

The bottom line is that understanding consumer buying behavior means businesses can achieve success in selling their products and services. Although every buyer is an individual with their own personality, emotions, and social makeup, there are trends that marketing teams can track.

Here are three reasons your company should prioritize understanding consumer buying behavior.

Content personalization

Creating personalized content may well be the most powerful tool in a company’s marketing arsenal. A worrisome 71 percent of consumers are frustrated by an impersonal experience, especially when shopping online. Ensuring that your content is personalized is more important than ever in today’s market.

Don’t risk losing business to the competition. You need to know exactly how your customers behave through their purchasing process so you can give them the personalized content and experience they expect.

Customer retention

Converting any single customer is a victory—but the real prize is achieving customer retention. Customer retention is more cost-effective than securing a first-time buyer. Increasing your retention rates by just 5 percent can raise your revenue an astonishing 95 percent.

Both attaining and retaining customers requires an understanding of consumer behavior. Create an experience that buyers want (and want to relive). Repeat customers are also valuable—they’re more likely to refer your products or services to their friends, family, and colleagues.

Consumer differentiation

Distinguishing one customer from another matters. By differentiating multiple buyer personas, you can design marketing materials and campaigns that are targeted and personalized. This doesn’t help you serve just one type of customer. It ensures you can appeal to a diverse pool of qualified prospects with products, services, and marketing materials that are tailored to them.

Creating a consumer behavior model

A consumer behavior model is a structure that explains why and how customers make their purchasing decisions. This model enables you to analyze (both qualitatively and quantitatively) how a buyer persona interacts with your business. The purpose of creating this model is to uncover your personas’ motivations and priorities as they go through every step of their buyer’s journey.

To create an effective consumer behavior model, follow these four steps:

• Segment your customers
• Identify trends
• Compare data
• Apply and analyze

1. Segment your customers

Segmenting your customer base is the first foundational step when creating a consumer behavior model and effective buyer personas. There are lots of ways to segment your customers using a wide range of characteristics, including users’ demographic traits and engagement tendencies. Analyzing gender, age, locale, social media engagement, and web activity will enable you to produce diverse, actionable behavior models for all possible buyer types.

Let’s take a closer look at several different ways you can segment your buyer personas in order to develop the most effective model for your business.

Benefits sought

One way to segment your buyer personas is by the benefits they seek in a product or service. What features do they want? What problems are motivating their search for a solution? If a customer places higher value on a particular benefit, this is the defining factor that drives their decision to buy your product or service.

Occasion or timing-based

When segmenting customers because of occasion or timing, keep in mind that these occasions break down into universal or personal patterns. A universal occasion will apply to a large segment of your audience, such as a holiday.

Personal occasions may be recurring or irregular events. A recurring personal occasion might be a monthly coffee subscription, a birthday, or an anniversary. Irregular personal occasions are more challenging to analyze and market to. The birth of a niece or nephew or the celebration of a friend’s wedding may prompt a purchase, but these events are extremely difficult to predict.

Usage rate

You can also segment buyer personas by the rate at which they use a product or service. Does a customer burn through a high-end candle at the rate of one per week or one per month? Is a buyer subscribing to software on a monthly or annual basis? Frequency can indicate how loyal a customer is to your product or service, so it’s a useful way to segment your buyer personas.

Loyalty status

Segmenting customers based on their level of loyalty helps your marketing team understand a buyer’s needs and then satisfy those needs. A loyal customer is among your most valuable assets. They deserve special treatment, so reward their loyalty and motivate repeat business.

Customer journey stage

Once you develop a clear buyer persona and know every step of the ideal customer journey, you can segment your customers by what stage they’re in. This allows you to identify obstacles that cause a customer to stall within the sales pipeline. It also helps you better understand how to personalize content based on a buyer’s readiness.

RFM model

The RFM model is a newer lens of analysis, aimed primarily at ecommerce buyers. It analyzes how recently and how frequently a customer buys from your company.

RFM stands for recency, frequency, and monetary value. These variables show you:

R: how recently a customer placed an order
F: how many times a customer made a purchase in a designated period
M: how much a customer has spent since their initial order

Although an RFM model can be run manually in a spreadsheet, it’s easier and faster to generate it automatically through CRM analytics.

No matter which methods you use, the purpose of segmenting customers is to construct actionable buyer personas to better understand how to market to them and increase their customer lifetime value.

2. Identify trends

Once you’ve segmented your customers, see what trends emerge from each type of buyer persona. What external factors might have influenced a purchasing decision? What is the context for these customers’ needs?

3. Compare data

Now that you’ve collected qualitative data on buyer segments and trends, you’ll want to gather quantitative data for comparison. A comprehensive analysis will incorporate primary, secondary, and tertiary data—subscription rates, social media insights, and email analytics from your company, consumer reviews or analytics from competitors, and industry statistics.

Compare this quantitative data with the qualitative data gleaned from your segmented customer base and the trends you identified. Go step-by-step through the buyer’s journey and cross-reference your data sets. How does the buyer persona progress through the customer journey? Which buyer persona purchases a particular product? When did they buy it? From what outlet? Using which method?

As you compare your data sets with the buyer’s journey map, once again identify trends that recur. Take note of obstacles and unique behaviors. See what stands out about your highest-value customers’ buying behaviors.

4. Apply and analyze

Apply these insights to your next marketing campaign with optimized content and delivery methods. Determine how effective your updated campaign methods are by examining conversation rates and customer lifetime value. New trends emerge regularly, so it’s critical to engage in ongoing analysis and adapt to any changes in your customers’ behavior.

Consumer behavior examples

Examining a few consumer behavior examples can help solidify the theory behind the behavior. So, here are two examples that analyze a particular customer based on their consumer behavior style.

A complex computer purchase

Alicia is upgrading her old, slow laptop because she just got a new remote job. A laptop is a high-cost and high-impact purchase, so Alicia is engaging in complex buying behavior.

But the influences on Alicia’s purchase are numerous: though she’s used PCs her whole life, the company she is moving to primarily uses Macs. She wants to ensure that her laptop can handle all company-issued software, but at the same time, she’s nervous about transitioning to a new OS. Simultaneously, her close friends have been using Macs for years and recommend them—but the price point is also higher than Alicia’s old PC brand.

Alicia’s next step may be to research her options online. If you’re a PC company hoping to appeal to a customer segment like Alicia, you may focus on providing robust online content around usability, price, longevity, software integrations, and customer service. Alicia is already loyal to your PC brand, so it’s important that during her initial tenure with the product, she’s impressed by the customer service, user experience, and quality of the laptop. You may also engage her through live chat while she’s researching new laptops on your website, or you might offer her a discount code as further motivation to remain with your brand.

A customer like Alicia doesn’t need information about how your OS works—she’s already a user. She also wouldn’t benefit from targeted information about how your PC system is optimal for gaming, for example, as that’s not her primary intended use of the product. By understanding Alicia’s personal needs, history, and position in the sales funnel, you can more effectively craft marketing materials to encourage her to stay with your brand.

A habitual herbal purchase

Omar is making pasta tonight for his family. While walking through the grocery store, he remembers that they are low on oregano, and he uses a lot of that in his famous homemade sauce.

He scans the available options on the shelves: a name brand at full price, another name brand on sale, and a store brand that’s a little less than either of those. Omar isn’t particular about name-brand spices. Oregano’s oregano, isn’t it? He reaches for the store-brand oregano but then glances at the bottom shelf and sees several larger bottles of black pepper, garlic powder, and yes, oregano! The price per unit is better than the store brand. Because Omar makes his pasta sauce at least once every week, this is the most economical choice.

Omar is engaging in habitual buying behavior for an item he uses regularly. He’s not particularly susceptible to branding because he doesn’t see much difference between the brands. The only research he’s doing is calculating which jar is the best deal before he moves on with the rest of his grocery trip.

Customers like Omar might be influenced by sales and promotions or product placement in the store where they already shop, but they may not be so susceptible to social media or direct email marketing—at least not for restocking herbs and spices. Understanding Omar’s habits and patterns means your marketing and sales teams can work on new strategies to pique Omar’s interest in an interesting spice blend or ensure regular promotions that will catch his attention the next time he runs out of his favorite herb.

Leverage customer behavior to improve your sales cycle

Getting to know your customers is a continual process and one that is well worth your time and effort. Using your well-defined buyer persona(s) to forge authentic connections with your customers is the secret to increasing engagement, from the top of the lead funnel to the end of the sales pipeline.

Use the most innovative options in sales technology to help you track buyer trends and build consumer behavior models that will transform your buyer personas into effective marketing tactics and your customers into brand advocates.

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