The 4 Approaches for Studying Market and Customer Behavior

Introduction

Digital Marketers who spent infinite time on how to market, where to market, who to market to, and so on, do so through different methods. As we approach the understanding behind marketing decisions and the ultimate crafting of digital marketing strategy, there is a growing need to study the market and understand the way consumer behaves.

In this blog, we are going to develop four approaches to how we can study the market and the customer behavior that comes alongside.

These approaches are; 

• Behavioral Approach 
• Behavioral Economics Approach
• Market Segmentation Approach
• Psychological Approach

Studying Market and Consumer Behavior: What It Means

What is the essential purpose behind studying the market and the behavior of customers? This specific research on consumer behavior also aims to assist marketers and their brands in deciding how and where to showcase their products. Its target is to showcase the business owners or entrepreneurs ways in which they can place their products and services in such a way that it has the greatest influence on the demand shelf of the market. Having the ability to connect with your consumers by studying their buying behavior is the crucial component of not only engaging with your customers and potential customers but also helping your business to be recognized as a professional and concrete brand. 

Why is it important to study consumer behavior?

The rationale is the same as it is for any other behavioral study: understanding the behavior helps in predicting the outcomes. You can use such information by surfing the net. Analyzing the ways in which different brands approach their own consumers can give you a general idea of how business growth is likely to happen. Having a research-backed plan developed to adapt to your business’s benefit can aid in beating the competition but also reach your clientele in a manner so unique that you can become the case study of the other digital marketing courses.

To grow a business is to understand why so many people buy this and do not buy that, why they shop this once a month and that once every three months, and why those chose to purchase some products online and others in physical shops.

Behavioral Approach

The age of technology gives too many advantages. Too many for digital marketers not to benefit from. Compared to before, when marketing teams would have to go through consensus surveys and geographical research on how the people in their areas reacted to a particular sale or an event, now digital marketers have the world at their hands a few clicks away. However, now, people seem to be bombarded with insignificant advertisements, email messages, phone calls, as well as other forms of community engagement, which they undoubtedly disregard.

Too much information can lead to disinterest. Ergo why when studying the market and customer behavior, it is important to find the fine line between the right information displayed at the right angle and the ‘too-much-information’ constricted in one space.

For example, when we study great brands like Nike or Adidas; most of their advertisements that sell shoes only have one photo and one to three words. The ability to recognize the brand by the advertisement has been mastered by these retail shops for the simple purpose that they have been able to study their target market and understand how their customers will react to their product placements, be it physical or online. This security provides them the reassurance to create as freely as possible. As a business starting from scratch, sitting down and visualizing who you will sell to and the aim of how you want them to react is a great place to start.

Behavioral Economics Approach

The Behavioral Economics Approach is the economic structure behind the human mind when it makes an investment decision or simply, in human words, decides to buy something. As marketers, our aim is to come up with creative content to fuel the placement of a product or a service by studying the manner in which our clientele makes their decision. 

To persuade the consumer to select your company over a competitor is the fundamental rule of marketing.

By analyzing and understanding the behavior and attitudes of how consumer decisions can be influenced. We enquire about the reasons behind behavioral patterns that our target audience may exude. By doing so, a behavioral economist or a marketing team can assist in developing proper and effective business strategies to boost the company’s rank.

How does a behavioral economist or a marketing team use that information? By giving significance to the company, with the way they place the products or services physically; on billboards, posters, banners, and so on, or on online platforms. They distinguish the time people are online, how they would like to receive their information and how many times would they like to be reminded of a ‘good deal’. It consists of making major to minor changes to the product, branding, or options available, from the color tones to the font and font sizes. It means thinking if the product or service will be presented in a dynamic or static way. All of these simple yet, major tweaks can have a significant effect on consumer behavior and attitude.

Market Segmentation Approach

We can call it the divide and conquer plan if one wants to be creative. If you want to be more technical with the definition, we could define it as the study of the audience and its diversity; which then, as marketers or as business owners/entrepreneurs, we can use to better understand the way in which we can grow a company’s identity.

There are advantages to understanding how segmentation can help grow your business or brand. When you understand the audience and list segmentation, you can improve many of your metrics gradually as you grow comfortable in how you promote your services and products. Fragmenting the market into smaller segments benefits companies as they use their time and resources more efficiently. With a better understanding of the prospective market and the use of advertising personalization to meet the needs of the targeted group, products and services are placed better which results in growth.

Types of Market Segmentation and their importance

The 3 Types of Market Segmentation

Demographic, Psychographic, and Geographic are the three types of segmentation. These are typical examples of how businesses can segment their markets based on gender, age, lifestyle, and so on.

The four types of segmentation in your market depend on the who (demographic), the why (psychographics), the where (geographic), and the how (behavioral).

How do these three affect the way you can do business?

Demographic Segmentation, or ‘The Who’

Demographic might be the most simple and most direct method of defining a type of customer, but it is still beneficial. Demographic segmentation explores distinct and separate non-character attributes such as:

Age

Gender

Ethnicity

Income

Educational Level

Religion

Profession/role in life and career

 

Why is Demographic Segmentation beneficial?

Demographic Segmentation can help you achieve high levels in your business. Implementing this tactic can assist you in:

• Creating long-term customer relationships

• Increasing the quality of your products and services

• Improving your marketing strategies

Psychographic Segmentation, or ‘The Why’

When you understand your customers’ psychological characteristics, you have the opportunity to market to the fundamentals of their beliefs and thoughts, which can have a major effect on the success of your marketing campaign. Psychographic segmentation focuses on the personalities and interests of your customers. Customers can be defined in this context by their:

Personality characteristics

Hobbies

Values in life

Beliefs

Lifestyles

Some questions to ask

When it comes to psychographic segmentation, we mainly deal with the psychology behind decision-making for each client. With everyone having their thought process, it is hard to understand how exactly a client bases themselves on when they choose an investment. As we continue to evolve in the digital marketing field, we can sometimes forget that people are human and not just ‘profitable opportunities’. The best way to segment psychologically is by putting yourself in your clients’ shoes.

How you do that is based on the type of questions you ask;

• What does my client want?
• Why will they choose my business?
• How do I inspire and satisfy those who buy from me?

Geographic Segmentation, or ‘The Where’

As a business owner, whether you are starting small or you already have a concrete baseline of clientele, knowing the segment of your geography is important. Understanding where your primary areas of work will be is vital to the growth of your business. How so? Your company’s products, services, and brand will be heavily impacted by who you do business with. Therefore, your clientele will be situated in one place. The primary need to understand the location where you will distribute your services will help you to understand how exactly to grow your business.

Geographic segmentation is a decision that as a business owner/entrepreneur, you should make based on diverse factors. These factors could be:

• How many products and services you are willing to deliver?
• How much time does the product and service take per client?
• How much will you be willing to invest? (The wider the distribution of products, the bigger the investment)

An insight…

When you start small, it is evident that your geography will be based around the region where you are starting. For instance, in Mauritius, many local small businesses have created a form of community to promote their work (‘Made in Moris’). Local businesses have strived in their market because they had the vision to target the areas where they will prosper.

Psychological Approach

To persuade is the biggest digital marketing tactic. To assure your consumers on making the bet on your brand is the aim of every digital marketing strategy. The focus here is when you study the market and try to understand the behavior of customers, ultimately your motion is to get their heads turning towards the direction of your business.

As mentioned in the first line; to persuade. Persuasion is a form of psychology. In digital marketing, it is one of the main factors to consider when growing a business, from placing products and services to making face-to-face or online client meetings. The aim is to understand the psychology behind the customer who makes the decision to buy. What pushes someone to invest in something?

Digital Marketers today use diverse digital tools to create. While the need to interact with your target audience is a means to maintain bonds and create new bonds, the result of the interaction must lead to the growth of the business. As such, the psychological approach in digital marketing can be called ‘emotional marketing’. Emotional Marketing can be illustrated in different forms but it serves the purpose of keeping the attention of your consumer on the content you create. There should be an emotional investment; the need to make a consumer believe in the same purpose as a business does. For example, the use of metal straws for the betterment of the environment, or the use of biodegradable containers for the health of the ocean and those who reside in it.

Conclusion: The Future of Marketing is a Marketer Who Knows Their Data

A business must study the market and customer behavior. The reason why is to surpass the survival stage and move to the growth stage. SWOT (Strengths, weakness, opportunities, and threats) and P.E.S.T.L.E (political, economic, social, technological, environmental, and legal) analysis techniques and be used for studying the market. 

What can we study in the market?

• Trends in the market
• Pricing Strategies
• Marketing Strategies
• Promotional Strategies
• Competitors
• Stakeholders

What can we study in customer behavior?

• Patterns of purchase
• Content preferred
• Pricing & promotion strategies make more sales
• Customer service preferred
• Customer orientation/ product orientation

We would like to know your insights about the future of marketing. Please share your comments and opinions in the comments. Thank you!