What Even is Consumer Behavior?

The term consumer behavior gets tossed around a lot. Let’s take a moment to properly answer the question: What is consumer behavior? 

At its core, consumer behavior is an act of studying a specific type of people—consumers. It is a study of humans as buyers. We all live in a consumer society, and whether we like it or not, we’re all consumers. With this in mind, consumer behavior is a study of us as individuals and as groups.

By Matt Johnson, Phd., and Prince Ghuman

Consumer behavior is a branch of the marketing tree. It is a hodgepodge of multiple disciplines—psychology, sociology, marketing, and behavioral economics. Consumer behavior even encompasses anthropology and ethnography, the study of people and culture in their social habitat.

Deconstructing Consumer Behavior

The goal of combining all these disciplines is to ultimately learn about the mental, emotional, irrational, and behavioral nuances governing our consumption. This spans the entire buying process: our actions before, during, and after a purchase.

Consumer behavior and marketing go hand in hand. The core of marketing is understanding the needs and wants of customers. To this end, the insights inform a variety of marketing functions – from big-picture branding to the subject line in an email marketing campaign.

If you had to, you could put all marketing functions inside the famous consumer journey: Awareness, Consideration, and Purchase:

• Awareness – Are consumers aware you exist?

• Consideration – Are consumers considering your product/brand to fulfill their needs/wants?

• Purchase – Are consumers buying your product?

At the risk of sounding pedantic, we feel the consumer journey is going the way of dinosaurs and, instead, prefer the AARRR framework for marketing; Acquisition, Activation, Retention, Revenue, Referral:

• Acquisition – The first touchpoint between the brand/product and the consumer.

• Activation – Some form of action by the consumer, which indicates interest in the product/brand. (Add to cart click, email newsletter sign up, etc.)

• Retention – Do the consumers re-engage with the brand/product? (Open marketing email, revisit website)

• Revenue – Are consumers buying the product?

• Referral – Are the consumers advocating for the brand/product? (Sharing referral code, word of mouth)

Whether you look at the old school ACP funnel or the new school AARRR funnel, consumer behavior informs each of the stages.

How Consumer Behavior Meets Tech and Neuroscience

Consumer behavior has been studied scientifically for nearly a century. However, two of the biggest inflection points have come recently: technology and neuroscience. Previously, companies with the biggest wallets could afford a dedicated team, but tech changed all of that. The single most significant impact of tech on consumer behavior has been the CRM—customer relationship management system—and Salesforce is the Michael Jordan of CRMs.

Small to medium size companies today have access to CRMs that can use behavioral data to find patterns. They might not be able to afford full-time psychologists, sociologists, or neuroscientists, but at least the gap is closing. CRMs provide insights down to the level of individual customers as they move in and out of the AARRR. The line between our digital and offline lives gets blurrier by the day, and in the process, CRMs get richer data and better insights.

Richer data is also the reason why neuroscience has started to make its way into consumer behavior. The second booster might outgrow the field of consumer behavior itself – consumer neuroscience, better known as neuromarketing. Neuroscience has benefited from advances in brain imaging. fMRI (Functional magnetic resonance imaging), EEG (Electroencephalography), and GSR (Galvanic Skin Response), all help neuroscientists understand what is happening inside the brain. Neuromarketing is applying lessons from neuroscience to marketing —only with richer data coming from the brain itself.

Putting the Consumer Back in Consumer Behavior

Neuromarketing has the potential to overtake, or perhaps, succeed in the field. Historically, consumer behavior studies how consumers act outwardly, for example, a red add-to-cart button leading to more purchases. Neuromarketing shows what is happening inside the brain while the behavior is initiated, for example, the red add-to-cart button activating the nucleus accumbens, the brain’s pleasure center, and thus, leading to more purchases.

The big data cat is out of the bag, and will inevitably be combined with neuroscience-marketing. We are not far from a future where the combination of data (CRMs) and neuromarketing will provide unprecedented levels of behavior predictions and, eerily, behavior design. It is not all doom and gloom; however, as long as we, the consumers, take some time to understand the basics of consumer behavior and neuromarketing.

The layperson in 2009 knew more about financial markets than ten years prior. Similarly, the layperson in 2019 knew more about data than ten years ago. Our hope is we can say the same about the layperson’s understanding of consumer behavior ten years from now.

Johnson and Ghuman are founders of “PopNeuro – a Neuromarketing Blog for the masses” and co-author of “Blindsight – The (mostly) hidden ways marketing reshapes our brains”.  You can check out more of their writing here.

Photo by Camylla Battani on Unsplash.