What is Consumer Psychology?

The success and growth of an SME depend largely on its ability to attract and retain a loyal base of customers. It can only do this with a clear understanding of what those consumers want, need and value. While ongoing market research is a big part of this journey of discovery, this only paints part of the picture. While looking at this data can yield insights into consumer behaviour, it should be supplemented with a knowledge of consumer psychology.

Consumer behaviour and psychology are inextricably linked, and the better brands understand the psychological factors that influence consumer behaviour, the better they can position their offerings to suit the needs of their customers. Here, we’ll look at what SMEs need to know about consumer psychology and its influence on the everyday decisions consumers make.

Understanding the consumer decision-making process

Consumers rarely make decisions arbitrarily. Even spontaneous impulse purchases are motivated by psychological quirks and underlying personal needs. For instance, the spontaneous decision to purchase a chocolate bar at a supermarket checkout may stem from frustrations at work or an argument with one’s spouse and the need for sensory comfort.

Generally speaking, however, consumer decision-making follows a certain pattern that can be broken down into five stages:

• Problem recognition: The consumer recognises a need, want or pain point that can be satisfied by a purchase. These may be based on internal or personal factors like hunger or illness, by situational factors like a blocked drain or a flat tyre.
• Information gathering: Having identified a problem or pain point, consumers will then begin gathering information to determine the best solution for them. Instinctively, many will reach for their mobile devices and ask their preferred search engines or social platforms. However, others may confer with friends, family and colleagues, and others will reach out to trusted brands and sales professionals directly. It all depends on their individual values and where they feel they will get the best and most relevant advice.
• Evaluation: Based on the results of the information gathering stage, consumers will then evaluate the available solutions and apply their own personal criteria to determine which is the best fit for them. This evaluation will be based on their own wants, needs and expectations as well as external data like user reviews and star ratings, influencer recommendations etc.
• Decision: After gathering and evaluating the available information, consumers will then commit to a purchasing decision. However, they may not be completely resolute and may seek additional reassurances that brands should aim to provide in their returns policy, warranty etc. A carefully-applied discount or promotion can give consumers a nudge if they remain on the fence for too long.
• Post-purchase evaluation: Once the purchase has been made and the product consumed or implemented, the consumer will then make a post-purchase evaluation. This may simply be a personal determination about whether or not they liked the product, or it might extend to a star rating, review or continued purchase of that same product.

What psychological factors influence consumer behaviour?

While we may employ a range of cognitive and analytical processes to our consumer decision-making this is all underpinned by a range of psychological factors.

These will often include:

Personal motivations and desires

Most of the time we are motivated to make a purchase to satisfy an emotional need or desire within us. This may be to feel safe, to feel valued, to feel important, or to free ourselves of an inconvenience or frustration.

Beliefs and values

Consumers want and expect brands to stand for something. As such, they will look for brands with values and beliefs that align with their own. Whether this is a commitment to quality, a focus on sustainability, or a dedication to fair and equitable trading, consumers expect to see these values prominently featured in a company’s branding and online presence.

Perception

A consumer’s perception of a brand is entirely subjective and may influence their decision-making. This is why brands value social proof so highly. If a brand’s values align with theirs and they see that it has earned the approval of consumers like them, the positive perception will instil trust and confidence.

Social and cultural considerations

None of us exists in a vacuum. While purchasing decisions may be based on numerous internal psychological factors such as personal motivations, perceptions, beliefs and values, there are also social and cultural considerations that play a part.

Consumer behaviours can be influenced by the opinions of reference groups. These are groups of people that they look to for guidance on social values and behaviours. They may be friends, family members, colleagues or even celebrities and social media influencers. Social class is another factor, with consumers typically sharing buying habits with those of similar income levels, education, professions and lifestyles.

Consumers are also united by cultural groupings that may overlap with social classes. Social or class peer groups may share shared cultural, subcultural or even countercultural values that may shape their consumer behaviour.

Marketing and consumer psychology

To conclude, let’s take a look at how consumer psychology can shape a company’s marketing strategy. The better brands understand the psychology of their target audience, the better they can tailor their marketing efforts to that audience. Many psychological factors will determine its efficacy within a target audience.

The primary question, however, is how brands want their audience to feel. It’s estimated that 95% of consumer decisions are motivated not by conscious thought but by unconscious feelings.

Brands can leverage this in a number of ways including:

• Confronting fears and anxieties and using the brand proposition to make them feel safe
• Appealing to personal and social values
• Creating a sense of prestige and exclusivity that helps the consumer feel important and valued
• Appealing to the language, iconography and values of consumers’ cultures and subcultures
• Placing products strategically to appeal to certain needs (e.g. supermarkets placing fragrant, high-carbohydrate baked goods near a supermarket entrance to persuade hungry customers)
• Leveraging social proof and influencer marketing to build trust and familiarity