Consumer behavior theories help businesses optimize sales and marketing strategies by focusing on how consumers spend money, what influences their spending, and how it impacts firms’ planning. Theories include rational behavior, preferences, product prices, features, and knowledge. Demographics and income also play a role in consumer preferences.
Consumer behavior theories are used by businesses to optimize their sales and marketing strategies. These theories tend to focus on how consumers spend money, what causes them to spend more, and how consumers’ spending money should impact firms’ planning and strategies. Different types of consumer behavior theories can focus on the choices consumers make based on their budgets, how consumers make decisions to achieve the highest level of satisfaction, how consumers consider the utilities and characteristics of different products, or what and how much consumers know about particular products.
One of the most commonly used theories of consumer behavior states that consumers behave rationally. In other words, consumers tend to want to get the most out of their products for the least amount. Similarly, this theory states that consumers are unlikely to spend all their money at once, leaving them with no savings. At the other end of the spectrum, consumers often don’t save all of their money, an act that may force them to live without purchasing even basic needs, such as food, shelter, and clothing.
Another important theory assumes that consumers have tastes and preferences that determine the products in which they show interest. Marketers often perform consumer studies that break down into different demographics, such as occupation, age, and location, as these factors contribute to consumer preferences. Income is another important factor in this theory since income is what caps a consumer’s budget.
Product prices are often factored into one of the most commonly used consumer behavior theories. In general, companies believe that by pricing their products at the lowest possible sums, they can encourage consumers to buy more products. This is because rational consumers tend to purchase products that offer them the greatest degree of satisfaction while costing the least amount of money.
The features or utilities of different products tend to change the prices of the products. Because of this, consumers try to match the features they can use with the added price. This theory can be applied, for example, to car sales. A consumer can determine how much extra they would pay for a car with bonus features, such as extra entertainment or multimedia devices. A professional in the marketing department might try to determine how much extra the company can charge for bonus features without losing sales.
The impact of knowledge on consumer behavior is at the heart of another of the consumer behavior theories. Consumers are more likely to choose products they understand or are familiar with. The nature of the information also matters, as a company’s or product’s bad reputation can influence a person to buy a competitor’s product.
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