Consumer behaviour is the pre, during and post buying and product usage experience of consumers. It entails the buying behaviour, mental and social behaviour, personal and environmental behaviour of consumers. It’s a science that studies humans, hence the link to Economics and Psychology.
According to Radu, There are four types of consumer buying behaviour;
•Complex buying behaviour
•Habitual buying behaviour
•Dissonance-reducing buying behaviour
•Variety seeking buying behaviour
Okay. Let’s think of a consumer… Mr Lawrence Aderoju. A 47-year old Nigerian Civil Engineer living just off the Lagos Mainland with his wife and 3 children. We already know who he is. So what next? We ask what he buys? Why he buys? How he buys? and Where he buys? The answers to these questions help us to understand the buying behaviour of Mr. Lawrence a bit more.
Then as we gather more data for many more consumers we can spot trends in their behaviours while trying to add value. The interpretation of the data is known as consumer insights.
So imagine if Mr. Lawrence and eleven of his colleagues had habitual buying behaviours for certain products; let’s say milk. They buy 2.5kg of Ader Milk from ExarMart (a medium-sized retail store down the road) every month. That’s so much milk right? My friends… I said “imagine”. Hahaha! This goes on for three years and of-course begins to seem normal. Recently, their habitual buying behaviour has now changed to a variety-seeking buying behaviour and they purchase any milk brand in the same price range as Ader Milk.
Whew! Where are the Supply Chain professionals? Review your data, haven’t you noticed that the usual 30kg Ader milk from Mr. Lawrence and his colleagues is now probably 10kg or less? They have started purchasing Oniel Milk, Jojo Milk and others and that might be affecting your replenishment and will make habitual Oniel Milk consumers a bit sad to always find their favourite brand low in stock. Remember Mr. Lawrence and his colleagues are variety-seeking now and they don’t care anymore. This is the time for the Supply Chain team to act or risk losing customers to their competitors.
But then, what factors actually affect Consumer Behaviour;
• Economic factors – Buying power, Liquid assets
• Personal factors – Age, Occupation.
• Psychological factors – Motivation, Perception, Lifestyle
• Environmental factors – Climate and environmental impact awareness
• Technological factors – Internet Penetration, Innovation and Marketing strategies
• Socio-Cultural factors- Culture, Social class, Religion
• Political factors – Curfews, Government declarations
A close look at these factors from time to time gives us the consumer insights that we need here.
Additionally, understanding consumer behaviour is also vital in store layout. Do consumers in the city turn left or right when they get into a store? Should we create the main store entrance on the right or left? What products should be positioned where and why? How about making consumers stay longer in the store? The longer they stay the more they spend right? We should make it easy to enter and difficult to exit too. Haha! We can do some nice stuff; strategic positioning of fast moving products and increased visibility for slow moving essentials.
Top-notch Supply Chain Management (SCM) to accommodate changes in consumer behaviour will;
• Help to improve forecasting which avoids the bullwhip effect (known as demand amplifications due to forecast errors which yield supply chain inefficiencies)
• Reduce Out of Stock (OOS) items
• Enhance inventory optimisation
• Improve vendor management
• Present quality data analysis for decision making
• Increase visibility and
• Improve overall consumer experience.
