Chapter 3: Understanding Customer Behaviour

Warm Up Questions

• What was the last item you purchased for yourself?
• Why did you buy that particular item? What influenced your choice?
• How much does the brand name of a product affect your decision to buy it?

Key Terms

attention economy

a term used to describe the large number of things competing for customer attention

demographics

the physical facts, context, and income of customers’ outer world

digital disruption

the constant change and upheaval of many aspects of everyday living due to digital technology

psychographics

the motives, desires, fears, and other intangible characteristics of customers’ inner world

user persona

representation of a specific group of consumers who exhibit similar behavioural patterns, such as purchasing choices

Consumer Behaviour

1. The study of consumer behaviour draws on many different disciplines, from psychology and economics to anthropology, sociology, and marketing. Understanding why people make the decisions they do forms part of a complex ongoing investigation.

2. Marketing and product design efforts are increasingly focusing on the customer. Rather than making people want stuff, successful organizations are focused on making stuff people want. Given the abundance of available options, product or service attributes, pricing options, and payment choices available to the consumer today, competition is fierce, and only the considered brand will succeed. Understanding the consumers’ behaviour lies at the heart of offering them value. Consider that no point of engagement with your brand occurs in isolation for your customer. Their life events, social pressures, and motivations impact on their experience with your brand.

The Impact of Digital

3. How we communicate with one another, how we shop, how we consume entertainment, and ultimately how we see ourselves in the world, has all changed because of the digital world we now live in. If there’s one thing the past 10 years has taught us, it’s that there is constant disruption and upheaval in the digital world. This digital disruption can appear in many small and large ways.

4. One of the results of digital tools and media is the production of a world that is less stable. All industries are vulnerable to change when a product or service comes along that meets user needs in an unprecedented way. Netflix has disrupted the media industry, Airbnb has changed travel, and Uber has dramatically impacted what individuals can expect from transport options. Consider that people born after 1985, more than half the world’s population, have no idea what a world without the internet is like. They only know a rapid pace of advancement and some tools that serve them better than others.

5. The internet seeks no middlemen. Established industries or organizations can be bypassed completely when people are placed in control. Your customers can find another option with one click and are increasingly impatient. They are not concerned with the complexity of the back end. If Uber can offer them personalized cash-free transportation, why can’t your product offer something comparable? People will use the service that best serves them, not what best serves an industry or existing regulations.

The Global Citizens

6. Coupled with these empowered digital consumers is the clear contradiction in the relationship between a global citizen and increasingly fragmented and differentiated groups of people focused on specific interests. National identity, given global migration and connectivity, has shifted as the world has gotten smaller. On the other hand, the internet has created space for people to create, form, support, and evolve their own ideal communities. This duality forces marketers to remain knowledgeable about global shifts while tracking and focusing on specific needs of segments within their market.

The Attention Economy

7. The attention economy is a term used to describe the large number of things competing for customer attention. Media forms and the mediums through which they can be consumed have exploded over the last decade, and it’s increasingly difficult to get the attention of those you are trying to reach. Your customer is distracted and has many different things competing for their attention. There are, however, various tools and frameworks available to consider your customer. The goal with many of these is to inform your decision making and help you think from the perspective of your customer.

Developing User Personas

8. To understand all your customers, you must have an idea of who they are. While it’s impossible to know everyone who engages with your brand, you can develop representative personas (user personas) that help you focus on motivations rather than stereotypes. A user persona is a description of a brand-specific group of users who exhibit similar behavioural patterns in, for example, their purchasing decisions, use of technology or products, customer service preferences, and lifestyle choices. A user persona is a tool that can be applied when you try to understand your entire customer experience, or when you decide on the implementation of specific approaches.

Demographics and Psychographics

9. Understanding customers can involve two aspects:

• Understanding the physical facts, context, and income of their “outer world,” that is, their demographics. These include their culture, subcultures, class, and the class structures in which they operate, among other factors.
• Understanding the motives, desires, fears and other characteristics of their “inner world,” that is, their psychographics. Here we can consider their motives, how they learn, and their attitudes.

10. Demographics can be a lot of work to acquire but are generally objective and clear data points that change within well-understood and measurable parameters; for example, people get older, incomes increase or decrease, people get married or have children. Data sources like censuses, surveys, customer registration forms, and social media accounts are just a few places where demographic data can be gathered, either combined or individually.

11. Psychographics, on the other hand, are complex and deeply personal because, after all, they relate to the human mind. This information is very hard to define, but if used, it’s possible for marketers to uncover a goldmine of information about their customers. People make hundreds of decisions every day and are rarely aware of all the factors that they subconsciously consider in this process.

Finding the Right Motivators

12. Many brands develop elaborate marketing campaigns with gimmicks and rewards but find that these often fail. Often this is because of a misunderstanding of the motivators that drive customers to take action in the first place. The most important factor to consider in choosing a customer motivator is relevance to the customer, to the brand, and to the campaign. Ask yourself, “Is the incentive you are offering truly relevant and useful?” The success of your customer persona will depend on how carefully you question assumptions about your customer, how carefully you draw on research, and how you focus on their motivations and the way decisions are made.

(997 words)

Comprehension Questions

1. What are two examples of academic fields that impact the study of consumer behaviour?
2. Give one example of how digital technology has changed the way we live our lives.
3. What other aspect has added to these changes in digital technology and made marketing today more challenging?
4. What are two aspects that marketers need to consider in understanding consumers’ motivation to purchase a product?
5. What is the most important factor for marketers to consider when determining customer motivation?

Chapter 3 Answer Key

Key Vocabulary

Vocabulary Practice

Definitions Chapter 3

Fill in the Blanks Chapter 3

Collocations Chapter 3