Understanding customer behavior is one of the keys to success in the modern business era. As a brand, understanding what drives consumers to choose a certain product or service can give you a competitive advantage.
Amid the rapid development of the Indonesian digital market, understanding customer behavior has become increasingly crucial in designing effective business strategies. Why?
Based on data from Statista Market Insights, the number of e-commerce users in Indonesia will reach 178.94 million people in 2022 and is expected to increase to 196.47 million users by the end of 2023. In addition, in April 2021, a survey by We Are Social showed that 88.1% of internet users in Indonesia had used e-commerce services to buy products. This percentage is the highest in the world.
The online shopping phenomenon in Indonesia creates unique dynamics in customer behavior. For example, the trend of shopping via social media platforms, known as "social commerce", has changed the way customers interact with products and brands.
Companies such as Bukalapak and Shopee have adapted their strategies to better suit Indonesian consumers' unique and diverse online shopping behavior.
This article will discuss deeply what consumer behavior is, why understanding it is very important for companies, the types, and the influencing factors.
Definition of Customer Behavior
Customer behavior is a study that focuses on how individuals choose, buy, use, and even dispose of products or services. These studies not only look at the final act of purchase, but also try to understand the reasons, motivations, and other factors that influence the decision.
For example, someone might buy a new cell phone not just because their old one is broken. However, it may also be because they want to have the latest technology or because of the influence of friends and family.
Thus, understanding the correct definition of customer behavior is crucial before delving deeper into the subject.
Why is Customer Behavior Important?
A study from McKinsey shows that companies that prioritize understanding consumer behavior have a greater chance of achieving significant growth.
It's not surprising that now every brand is trying to understand what their consumers want and need. Why? By understanding customer behavior, they can create more targeted strategies, increase marketing efficiency, and of course increase sales figures.
Moreover, by understanding consumer behavior, companies can:
Identify untapped market opportunities
By understanding what consumers want and need, companies can find market segments that have not been reached by competitors or find needs that have not been met by current products or services.
Developing products or services that better suit consumer needs
A deep understanding of consumer needs and wants allows companies to design or modify products and services more in line with what consumers want.
Create more effective and engaging marketing campaigns
By knowing the main drivers of consumer purchasing decisions, companies can design marketing campaigns that are more relevant and engaging to their target audience.
Increase customer loyalty by fulfilling their expectations
Consumers who feel their needs and expectations are fulfilled by a brand tend to be more loyal and will return for their next purchase.
In other words, understanding consumer behavior isn't just about knowing what they buy, but also why they buy it. This gives added value to companies in designing more effective business strategies.
Factors that Affect Customer Behavior
Consumer behavior doesn't just happen, various factors can affect a person's decision. These factors can be categorized into internal and external:
Internal Factors:
- Motivations and needs: Every consumer has motivations and needs that encourage them to make purchases. For example, someone might buy new clothes to look presentable at an important event.
- Perception: How consumers see and interpret information about products or services can influence their decisions. For example, when buying certain products, they are perceived as someone with a certain class level.
- Attitudes and preferences: Consumers' attitudes towards a brand or product can also influence their purchasing decisions. For example, if someone has a positive perception of a brand, they are more likely to choose products from that brand.
External Factors:
- Cultural and social: Norms, values, and traditions in society can affect purchasing decisions. For example, in some cultures, giving luxurious gifts on certain occasions is considered a norm.
- Influence of family and friends: Suggestions and recommendations from family or friends often influence consumer decisions.
- Economic factors: Economic conditions, such as unemployment or inflation rates, can affect consumers' ability and desire to purchase.
4 Types of Customer Behavior
Every consumer has a different way of interacting with a product or service. Knowing these types of consumer behavior can help companies target the right audience with appropriate strategies.
These are 4 types of consumer behavior that are commonly mentioned in marketing literature:
Habitual Buying Behavior
This refers to the consumer's habit of purchasing certain products without much consideration. This usually occurs for daily products such as toothpaste or soap. Consumers do not need in-depth information and often choose based on habit.
Variety-Seeking Behavior
Consumers with this behavior tend to seek variety and frequently change their choices. For example, someone who buys a different breakfast cereal every time they shop.
Dissonance-Reducing Buying Behavior
This occurs when consumers feel unsure about the purchasing decision they have made and seek additional information to ensure they have made the right decision.
For example, after purchasing a new television, consumers likely read online reviews to make sure they select the best model.
Complex Buying Behavior
Consumers exhibit this behavior when they purchase expensive or rarely bought products, such as cars or houses. They will do a lot of research, compare various options, and consider many factors before making a decision.
How to Measure Customer Behavior
Only intuition is not enough to assess customer behavior. Companies need to have objective and accurate measurement methods to understand consumer behavior.
Surveys and questionnaires
This is one of the most common ways to collect data directly from consumers. By asking specific questions, companies can gain insights about consumer preferences, habits, and points of view.
Sales data analysis
By examining sales data, companies can find out which products or services are the best-selling, the best time to sell, and what trends may emerge in the future.
A/B testing
This method involves comparing two versions of the same thing (for example, two different website designs) to see which is more effective at encouraging consumers to take a particular action.
Social media analysis
By monitoring social media, companies can understand what consumers are saying about their brand, product, or service. This provides an insight into consumer perception and areas that may need improvement.
Ethical studies
Observing consumers in their natural settings, such as while shopping in a store, can provide a deep understanding of how they make decisions.
By using a combination of the methods above, companies can collect relevant and in-depth data about consumer behavior. Furthermore, the results can be used to improve marketing and sales strategies.
Applying Customer Behavior Analysis in Marketing Strategy
Understanding consumer behavior is one thing, but implementing it in a marketing strategy is a challenge. It is certain that with the right analysis, customer behavior can be a powerful tool for creating more resonant and effective marketing campaigns.
Here are some ways to implement it:
Market segmentation
Based on consumer purchasing behavior, preferences, and needs, companies can divide their markets into specific segments. This way, they can target each segment with the most relevant messages.
Content adjustments
By understanding what consumers are looking for, companies can tailor their marketing content to better suit consumers' needs and interests.
Marketing channel optimization
Not all consumers respond the same way to all marketing channels. By understanding where consumers are most active and responsive, companies can allocate their resources more efficiently.
Product development
Consumer behavior analysis can provide insights about what consumers want from a product or service. With this information, companies can develop or modify their products to better fulfill consumer needs.
Price setting
Understanding the "value" that consumers give to a product or service can help companies set appropriate prices that reflect that value and so can compete in the marketplace.
Conclusion
A deep understanding of how, why, and when consumers make purchasing decisions can provide companies with a competitive advantage.
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With predictive analytics features, behavior-based personalization, engagement strategy analysis, and customer journey mapping, this platform ensures that every customer interaction with a brand is an opportunity to strengthen relationships. Imagine, with just one or two clicks, customers can be mapped based on their habits and preferences. Then, your product can provide the best recommendations for the ones they like the most. In the end, customers who feel comfortable interacting will continue to return and become loyal customers.
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