How to analyze consumer behavior

For this article, I used the Ice2Heat company as an example. Ice2Heat is a fictional organization specializing in frozen pizza with sodium reduction and claims to be healthier than traditional pizzas. It is important to mention that in some countries pizza is considered a meal for lunch or dinner, such as in the United States. In other countries, pizza is a snack to serve in special celebrations, for example, birthday parties.

One of the challenges faced by all marketers around the world is how to influence the purchase behavior of consumers in favor of the product or service they offer. This means, for companies like Ice2Heat, that the marketer works to increase the number of consuming frozen food per household. More than this, these consumers should choose Ice2Heat brand instead of the competitor brand. While their ultimate goal is to influence consumers’ buying behavior, most marketers understand that the actual purchase is only part of an overall process.

Consumer behavior can be defined as the process and activities in which people engage when searching for, selecting, purchasing, using, evaluating, and disposing of products and services in order to satisfy their needs and desires. For many products and services, purchase decisions are the result of a long and detailed process that may include an extensive information search, brand comparisons and evaluations, and other activities. Other purchase decisions are more incidental and may result from little more than seeing a product prominently displayed at a discount price in a store.

Marketers’ success in influencing purchase behavior depends in large part on how well they understand consumer behavior. Marketers need to know the specific needs that customers are attempting to satisfy and how they translate into purchase criteria. They need to understand how consumers gather information regarding various alternatives and use this information to select among competing brands, and how they make purchase decisions. Where do they prefer to buy a product? How are they influenced by marketing stimuli at the point of purchase? Marketers also need to understand how the consumer decision process and the reasons for purchase vary among different types of customers. For example, purchase decisions may be influenced by the personality or lifestyle of the consumer.

However, consumers always had the power to choose which brands to remain loyal to. Nowadays, with the boost of social media and the fact that they are constantly connected has given them greater ability to influence other consumers’ buying decisions as well. Also, by using their phones in their pockets, and the internet on their phones, consumers now have the power to mandate where, when, and how they interact with companies. Therefore, consumer behavior impacts the fate of business. That is not an age of empowerment just for consumer, but for business too. The digital revolution also made it easier for companies to collect insights on the consumer to better understand their audience's behavior. Consumers have more power to learn about a brand before they even visit its website or one of its stores. And through data, businesses can learn more about what customers want.

Nonetheless, the consumer behavior can be applied in Marketing Strategy, Regulatory Policy, Social Marketing, and Informed Individuals. For this paper, I will keep the focus in how to analyze consumer behavior to create a solid Marketing Strategy.

How to analyze consumer behavior trends

It is important to keep in mind that consumer behavior is not idleness, but instead, it is a process. The reason is because our motivations to consume are complex and varied. It is not a linear process with only a single beginning and a single end. The consumer behavior process has many interactions and influences from internal and external beliefs. So, it is impossible to analyze consumer behavior in a single and simple way. Because of this, in the following sections, three methods to analyze consumer behavior in the frozen food market will be shown.

- Segment Consumers: As much as consumer behavior seems too subjective and abstract, it is possible to quantify it. Market segmentation helps to divide into clusters the large network of consumers of the same product and/or service. The objective is to make the marketing strategy aimed at a specific target, a clearer and more accurate group. By identifying the different segments of a market, that is, its different clusters, it is possible to clearly see this division of the consumer world. As much as the same consumer good is analyzed, it is important to know that the people who buy these products have different profiles, behaviors, and desires. And that these characteristics guide the choices of consumers. To understand who the consumers of the frozen food market are and how they behave, they must be divided into two groups: the first based on their characteristics, and the second on their buying situation.

1. Customer characteristics: Perhaps, the first way to cluster a group of consumers is by geography. Understanding in which cities these customers live, whether they are from rural areas, or the size of their cities, allows companies to align this information with the Marketing Mix. Dividing customers demographically helps the company to know the average age of its consumers, their purchasing power, and their current stage of life. Demographic segmentation may still be the most common method of segmenting markets. Specially for companies running in the frozen food markets, KPIs such as household size, birth era, and marital status are important to create advertisement and products more aligned with their consumers. Psychographic Segmentation analyzes the attitude, lifestyle and personality of the people involved. They are subjective characteristics, but still possible to be identified. Many people share common habits, attitudes and temperaments that build their lifestyle. Knowing these traits of the company's target audience, the marketing actions will be better elaborated and will have the elements that will be persuasive to achieve the sales objectives.

2. Buying situations: This segmentation type shows consumer behavior only in the process of purchase. For the frozen food market, it is crucial to know if the consumer buys products by internet or brick-and-mortar retailers. Another important piece of information is to understand if a frozen food consumer is a light user or heavy user. Degree of use relates to the fact that a few consumers may buy a disproportionate amount of many products or brands. However, dividing consumers into groups according to their usage, loyalties, or buying responses to a product is behavioristic segmentation. This segmentation is a key point for an efficient marketing strategy.

- Database: Database Marketing is a strategy that proposes the collection and analysis of data to optimize the consumer experience. Database marketing tracks specific consumers’ buying habits very closely, and crafts products and messages precisely tailored to meet people’s wants and needs based on this information. Big Data can influence many areas of consumer life. From them, it is possible to generate valuable insights about the most efficient strategies and, thus, enhance the results. For instance, monitoring Google searches for frozen food can help marketers to identify specific areas of the United States that have been more interest in this kind of food. By monitoring social media, marketers can fathom the level of interaction and engagement from customers with their brand on the internet.

Nevertheless, database marketing is not only what happens on the internet. Most of companies have a powerful database in their Customer Relationship Management (CRM). They storage who is the client, how frequency they consume specific brand, their type of payments, geographic, demographic and psychographic profiles, purchase patterns, media preferences, and other relevant characteristics. CRM requires the marketer to develop and maintain a significant amount of information about their clients. The aim of CRM is to establish a relationship with one’s customers through affinities, personalized communications, and product/service offerings. By analyzing the characteristics of the database, a marketer can target a greater potential audience, then stimulate repeat purchases and cross-selling.

Perhaps, for a frozen food company, to collect and storage an amount of data about consumers is not an easy task. Some of these companies have as a client the retailers spread around the United States. These retailers whom sell to final consumers. There are many sources of information for marketing databases, such as: the retailers' data base, audit’s data base, the U.S. Postal Service, Experian Simmons Market Research Bureau, and so forth. -

• Classifying Consumer Motivations:

One of the most popular approaches to understanding consumer motivations is based on the classic theory of human motivation popularized by psychologist Abraham Maslow. His hierarchy of needs theory postulates five basic levels of human needs, arranged in a hierarchy based on their importance: (1) physiological — the basic level of primary needs for things required to sustain life, such as food, shelter, clothing, and sex; (2) safety — the need for security and safety from physical harm; (3) social/love and belonging — the desire to have satisfying relationships with others and feel a sense of love, affection, belonging, and acceptance; (4) esteem — the need to feel a sense of accomplishment and gain recognition, status, and respect from others; and (5) self-actualization — the need for self-fulfillment and a desire to realize one’s own potential.

Some authors have strong criticisms to Maslow’s Hierarchy. They affirm that the application is too simplistic, and it is possible for the same product or activity to satisfy every need. Also, some of them affirmed that the Maslow’s Hierarchy is too culture-bound. The assumptions of the hierarchy may be restricted to Western culture. In additionally, the hierarchy emphasizes individual needs over group needs. Individuals in some cultures place more value on the welfare of the group (belongingness needs) than the needs of the individual (esteem needs).

On another hand, there is the McGuire’s Psychological Motives study. McGuire developed a classification system that organizes various theories into 16 categories. This system helps marketers to isolate motives likely to be involved in various consumption situations. McGuire first divides motivation into four main categories using two criteria: (1) Is the mode of motivation cognitive or affective? (2) Is the motive focused on preservation of the status quo or on growth? However, these 16 categories are: Need for Consistency, Need for Attribution, Need to Categorize, Need for Objectification, Need for Autonomy, Need for Stimulation, Teleological Need, Utilitarian Need, Need for Tension Reduction, Need for Expression, Need for Ego Defense, Need for Reinforcement, Need for Assertion, Need for Affiliation, Need for Identification, and Need for Modeling.

Both of these theories can help marketers understand what motivates the purchase, since consumers do not buy products; instead, they buy motive satisfaction or problem solutions. But to know what motivates a consumer is a hard task, because consumers do not know what motivates them too. In this case, to probe the mind of the consumer it is necessary to run some marketing research methods. For instance:

• In-depth interviews: Face-to-face situations in which an interviewer asks a consumer to talk freely in an unstructured interview using specific questions designed to obtain insights into his or her motives, ideas, or opinions.

• Projective techniques: Efforts designed to gain insights into consumers’ values, motives, attitudes, or needs that are difficult to express or identify by having them project these internal states upon some external object.

• Association tests A technique in which an individual is asked to respond with the first thing that comes to mind when he or she is presented to a stimulus; the stimulus may be a word, picture, ad, and so on.

• Focus groups: A small number of people with similar backgrounds and/or interests who are brought together to discuss a particular product, idea, or issue.

Conclusion

As mentioned before, consumer behavior is a process, and motivations to consume are complex and varied. Consequently, understanding the wants and needs of different consumer segments is a not process with a single starting and ending point. Our choices as consumers relate in powerful ways to the rest of our lives. Because of this complex process, any company who desires to be a leader in its segment needs to put the customer in the center of the decisions. The company understands its customer so well that the processes, services/products are shaped to meet the needs of the customers. Nowadays, since the novel coronavirus outbreak, companies around the world are trying to understand and shape consumer behavior in the next normal. Consumer beliefs and behaviors are changing fast. To keep up with — and perhaps even influence — those changes, companies must leverage deep consumer insights.

References:

Belch, G. E., & Belch, M. A. (2012). Advertising and Promotion - an Integrated Marketing Communications Perspective. McGraw-Hill/Irwin.

Del Hawkins, D., Kleiser, S. B., & Mothersbaugh, D. L. (2020). Consumer Behavior - Building Marketing Strategy. New York: Mc Graw Hill.