Consumer behavior is an important factor for business owners to understand for sales and profits.
As an advisor to a business owner, I would suggest they understand and embrace psychological,
social, and personal factors regarding their customers. This will allow them to identify a target
audience, market appropriately to them, and generate new awareness to (potential) new
customers. With personal, they can identify decision-makers who can purchase their
product/service, understand their typical consumers, and their backgrounds. Age, race, religion,
culture, average salaries, disposable incomes, and more attributes are going to help create an
ideal profile for customers. With that, knowing what common social factors are for consumers,
and how they are generally impacted by them, can help make campaigns, ads, promotions, and
discounts tailored for their specific wants and needs. The psychological factor will allow for
advertising and campaigns which connect on emotional levels, generate brand awareness, and
build a connection between the consumer and brand. The stronger these are, the more likely sales
will generate, and recurring purchases will be made by consumers.
With producer behavior, costs can be minimized in major ways; three major ones being
technology, resource allocation, and economies of scale. When new technologies are introduced,
opportunities arise which allow less resources to be used, increases to resolution, output, and end
product creation to occur, as well as decreases in responses. A more efficient workflow can be
created, saving money in both the short and long term, while increasing sales and customer
satisfaction. Ensuring proper resources are available, on hand, and used will help minimize
excess waste, overhead, storage, and material orders. Optimizing labor and machinery will aid in
this. Finally, economies of scale can allow the overall costs per unit to decrease as production
levels and output increase; thus, saving in bulk purchases and resource allocation.
A skate/streetwear clothing company would be a good example of this. I would help identify the
common demographic of consumers who purchase their (and their competitors') clothing to
identify trends, age, and more. This will allow the business to tailor their prices and ads to best
meet the average consumer in their target market and build the common consumer profile. If we
identify that these consumers use social media, are between 16-28, are 70/30 split male/female,
and spend on average $60-$180 per visit, we could create short videos-format ads and social
media promotions where shipping is free for orders of $60, discounts are applied after certain
cart totals are met, and highlight how our brand meets the consumer's wants. With common
styles, sizes, colorways and more will be purchased, ensuring that manufacturing is in bulk, is
efficient with newer machinery, materials, and has a well-organized workflow can help minimize
costs per unit. If the store is digital only, the business could also outsource, provide free shipping,
and fulfill orders (send order to production) through outsourcing with a third-party to minimize
overhead and ensure exact materials are used every time.
Online Manipal. (2023, May 12).
What is consumer behavior, and why is it important?