Consumer behavior is the study of the way individuals, groups or organizations make decisions with respect to the purchase, consumption and disposal of goods and services. It studies characteristics of individual consumers such as demographics and behavioral variables in an attempt to understand people's wants. Consumer behavior study also tries to assess influences on the consumer from groups such as family, friends and society in general.
The term consumer behavior describes two different kinds of consuming entities: personal consumers and organizational consumers. The personal consumers buy goods and services for final consumption that can be their own use, for the use of the household or as a gift. Personal consumers are also called end-users or ultimate consumers.
Organizational consumers include companies and charity organizations, government agencies and various institutions (including schools and hospitals). All these organizations must buy products, equipment and services necessary for their functions.
The consumer behavior study has its roots in a marketing strategy that evolved in the late 1950s when companies started realizing they could sell more if they produced goods only after determining that the consumer would buy. This consumer-oriented marketing philosophy is called marketing concept. The main idea in the marketing concept is that a company can be successful if it determines the needs and wants of a targeted market and satisfies this demand better than the competition.
A customer may decide to buy a product or service based on many factors. Among the most important reasons are the ways in which the offered product meets consumers' needs, values or goals. Marketing experts also try to understand the reasons why consumers do not want to buy or use a specific product or service. Consumer behavior study also focuses on the ways people acquire and use things as well as the time and place that clients select.
Consumers also make their choices after deciding how much of the product or service they need, how often they need it and how much time will be necessary to buy, use and dispose of it. Another key factor is emotions. According to consumer behavior study, the factors that affect decisions for purchase, usage and disposal of goods and services can be classified into four main groups: the psychological core (the source of knowledge and information), the process of making a decision, the consumer's culture and consumer behavior outcomes. The social class, personal values, lifestyle and household influences also affect the selection of goods or services. People's desire to belong to a certain group and their sense of self determine the external signs they use to express identity.
There are four main applications of the consumer behavior study. The best known is in the preparation and improvement of marketing strategies of companies worldwide. A second application is public policy, and the third is social marketing that involves getting ideas across to consumers rather than selling something. As a final benefit, studying consumer behavior is expected to help the consumers themselves to make better decisions.
Experts have noticed the move towards a global consumer culture, in which people are united by their common devotion to certain brands. The development of technologies has helped cultures worldwide to start mixing, resulting in a significant effect on the globalization of consumer culture. With the growth of the internet, consumers now have easy access to the opinions of other users, which they often trust more than advertisements.
The most common way to define what the potential clients want is by conducting market research. It can be done through a survey, focus groups, personal interviews, projective techniques, observations, online research and scanner data. Surveys are used when the market researchers want to get specific information, while focus groups are useful when the marketer wants to launch a new product or modify an existing one.
Personal interviews help researchers to get in-depth information. Projective techniques are used when a consumer may feel embarrassed to admit to certain opinions, feelings or preferences. Observation of consumers helps to understand how they make decisions. Online research is becoming more popular as most people have computers and access to the Internet. The scanner data method shows the exact behavior of specific consumers.