Consumer behavior is an important part of product development, marketing and retailing. Understanding consumers can help a business determine which products or services to offer, how these should be packaged and priced, and what promotional activities should be undertaken. This post discusses why understanding consumer behavior should be important to a brand.

1. Strategic positioning

Businesses need to know the relative positions of their products in the marketplace because this can influence how they should try to grow and develop their market position. Businesses need to take a look at their product portfolio and assess where they have strengths and weaknesses based on consumer understanding. The strategic positioning of each product within the portfolio can then be determined. In addition, businesses may try to differentiate their products from competitors by creating a distinctive brand image and use of marketing communications. This is achieved by creating a brand promise and using brand-building behaviours such as naming, packaging and product design.

2. Product development

Businesses need to set the tone for their product development role when setting objectives for the new products or services they wish to offer. In addition, businesses should consider how the product can be packaged and sold to ensure the product is positioned effectively. Companies should also decide on the type of communication they wish to use to promote their product or service. Particular attention must be paid to this area because it will influence consumer understanding of the product and future sales potential.

3. Branding, packaging and design

Branding and packaging directly influence consumer understanding of a brand, influencing brand value, trustworthiness and credibility. It is essential that businesses keep in mind the factors which influence consumer understanding when designing the branding of their products. Packaging can influence consumer behavior because it is directly linked to the product and can therefore help to create a customer’s perception of a brand. In addition, businesses should also consider how they will market and sell their products, as this will also affect consumer understanding of a brand.

4. Marketing communications

Marketing communications are how brands promote their products and services. Businesses need to be aware of the types of marketing communications used by competitors. These include the promotion of a product via traditional media (i.e. television, radio, newspapers, magazines and billboards) as well as innovative (or non-traditional) marketing methods (for example, via promotional websites, social networking sites and mobile phones).

5. Role of public relations

Public relations can play a relevant role in developing consumer understanding when attempting to build brand equity (or brand value). It is important that businesses communicate with their target markets through a variety of media and by reaching out to potential users through tangible and intangible means. For example, product placement in films and television programs can help promote products or services. At the same time, sponsorship can result in a product being advertised on marketing communications such as posters and printed matter.

6. Customer relationship management

Customer relationship management is a business process aiming to manage how companies interact with current and potential customers. Good customer relationship management can enable businesses to retain customers, for example, by providing good service and competitive pricing, yet this can also result in an increase in sales and future brand equity (or brand value). In addition, it is important that businesses monitor how well their competitors are doing to assess their position in the marketplace.

In conclusion, consumer behavior is important in product development, marketing and retailing. Understanding consumers can help a business determine which products or services to offer, how these should be packaged and priced, and what promotional activities should be undertaken. Companies should therefore understand consumer behavior, enabling them to make informed decisions in such areas.