Topic > Economic Theories and Customer Behavior - 1503

For companies to be able to market products or services effectively, an understanding of how consumers behave and make decisions is necessary (Poon and Joseph, 2001). There are several theories related to this area, including economic theories and psychological theories. The first studies on theories regarding consumer behavior were developed through economic theory, for example the conception that consumers rationally advance to make the most of their satisfaction in the purchasing process. More recent research shows that consumers are influenced by different types of reference groups, such as family, friends, advertisers and role models. Terms such as impulse buying, mood, situation, and emotion are most commonly applied in concerns regarding consumer behavior. All these factors together form a comprehensive model of consumer behavior that portrays both the cognitive and emotional aspects of consumer decision making (Solomon et al., 2009). Assael (1994) explains consumer behavior as the process of recognizing and evaluating the various components of a purchase and further explains that there are two broad influences that determine the consumer's preferred choice. First, the desires of the individual consumer, awareness of the distinctiveness of the brand and awareness of alternatives are of great importance in consumer decision-making. Other factors that influence brand choice are consumer demographics, peer pressure, lifestyle and personal characteristics. Second, environment matters in consumer behavior, which includes culture, social class, and various groups. Assael (1994) also describes why it is crucial for a company like ZARA to be aware of information on consumer behavior, so that they can respond to questions from paper readers in time. Being responsive implies that a company must be accessible and willing to look into customer needs as quickly as possible. ZARA achieved this because its products were shipped directly from the central distribution center to well-located, good-looking stores twice a week, eliminating the need for warehousing and keeping inventories low (Christopher et al., 2004). Companies and businesses should always put themselves in the shoes of their customers and make an effort to get their perceptions and thoughts on the products provided to the particular company. This quality of being compassionate is very important and helps motivate customers. It involves listening carefully and asking relevant questions, speaking the customers' language and tailoring products to satisfy or meet the customer in the best possible way (Niinimäki, 2010).