How important is it for businesses to understand “Consumer behaviour”?

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Why people want what they want and why do they buy what they buy? Consumer behaviour allows such insights into consumers’ psychology. Businesses need to understand what motivates people to behave a certain way before designing their marketing plans and strategies. Your product could be unique and breakthrough in solving a problem and your consumer might want the product but do they actually purchase the product because it is the sale that affects the bottom line of your business.

Consumer behaviour goes beyond the cost and profit analysis. The focus is on individual consumer to understand the following:

What are the values, beliefs and attitudes of our target market? How do they perceive our product and identify themselves with the product? Is it a means for them to seek social validation, a status symbol, something that makes them feel good about themselves and flatter their ego, something that makes their family and children happier or just that all their friends have it and they think it is cool to have it too. What is the cultural background of our consumers? For instance self-enhancement is prevalent in individualistic Western society as compared to Japanese culture that values Collectivism.

Successful companies like Nestle understand the importance of Consumer Behaviour. Say they want to launch their coffee in Japan. They would first spend resources on understanding the Japanese values, cultures and motivations to carve a marketing and advertising communication plan: Tea time is almost a ceremony in Japan and how music, traditional clothing form an integral part of people's life.

Great features and benefits are not enough to make that sale. If you share that relationship with the consumers they would want to make your product an irresistible part of their life.This allows companies to become brands that can earn customer loyalty and a premium. Building this relationship is just like personal relationships where a couple puts in their best effort to understand each other. Therefore it is recommended that businesses allocate resources in conducting focus groups, in depth interviewing, observing consumers in different settings etc, to understand the underlying motivations of consumers.