3: Consumer Behavior- How People Make Buying Decisions

Why do you buy the things you do? How did you decide to go to the college you’re attending? Where do like to shop and when? Do your friends shop at the same places or different places? Do you buy the same brands multiple times or eat at the same restaurants frequently?

Marketing professionals that have the answers to those questions will have a much better chance of creating, communicating about, and delivering value-added products and services that you and people like you will want to buy. That’s what the study of consumer behavior is all about. Consumer behavior considers the many reasons—personal, situational, psychological, and social—why people shop for products, buy and use them, sometimes become loyal customers, and then dispose of them.

Companies spend billions of dollars annually studying what makes consumers “tick.” Although you might not like it, Google, AOL, and Yahoo! monitor your Web patterns—the sites you search, that is. The companies that pay for search advertising, or ads that appear on the Web pages you pull up after doing an online search, want to find out what kind of things interest you. Doing so allows these companies to send you popup ads and coupons you might actually be interested in instead of ads and coupons for things such as retirement communities.

Massachusetts Institute of Technology (MIT), in conjunction with a large retail center, has tracked consumers in retail establishments to see when and where they tended to dwell or stop to look at merchandise. How was it done? By tracking the position of the consumers’ mobile phones as the phones automatically transmitted signals to cellular towers, MIT found that when people’s “dwell times” increased, sales increased, too.“The Way the Brain Buys,” Economist, December 20, 2009, 105–7.

Researchers have even looked at people’s brains by having them lie in scanners and asking them questions about different products. What people say about the products is then compared to what their brains scans show—that is, what they are really thinking. Scanning people’s brains for marketing purposes might sound nutty, but maybe not when you consider the fact that eight out of ten new consumer products fail, even when they are test marketed. Could it be possible that what people say about potential new products and what they think about them are different? Marketing professionals want to find out.“The Way the Brain Buys,” Economist, December 20, 2009, 105–7.

Studying people’s buying habits isn’t just for big companies. Small businesses and entrepreneurs can study the behavior of their customers with great success. By figuring out what zip codes their customers are in, a business might determine where to locate an additional store. Small businesses such as restaurants often use coupon codes. For example, coupons sent out in newspapers are given one code. Those sent out via the Internet are given another. When the coupons are redeemed, the restaurants can tell which marketing avenues are having the biggest effect on their sales.

Some businesses, including a growing number of startups, are using blogs and social networking Web sites to gather information about their customers at a low cost. For example, Proper Cloth, a company based in New York, has a site on the social networking site Facebook. Whenever the company posts a new bulletin or photos of its clothes, all its Facebook “fans” automatically receive the information on their own Facebook pages. “We want to hear what our customers have to say,” says Joseph Skerritt, the young MBA graduate who founded Proper Cloth. “It’s useful to us and lets our customers feel connected to Proper Cloth.”Rebecca Knight, “Custom-made for E-tail Success,” Financial Times, March 18, 2009, 10. Skerritt also writes a blog for the company. Twitter and podcasts that can be downloaded from iTunes are two other ways companies are amplifying the “word of mouth” about their products.Rebecca Knight, “Custom-made for E-tail Success,” Financial Times, March 18, 2009, 10.

Environmental factors (such as the economy and technology) and marketing actions taken to create, communicate about, and deliver products and services (such as sale prices, coupons, Internet sites, and new product features) may affect consumers’ behavior. However, a consumer’s situation, personal factors, and culture also influence what, when, and how he or she buys things. We’ll look at those factors in Section 3.1 "Factors That Influence Consumers’ Buying Behavior". Section 3.2 "Low-Involvement Versus High-Involvement Buying Decisions and the Consumer’s Decision-Making Process" focuses on different types of buying decisions and the stages consumers may go through when making purchase decisions.