Understanding Consumer Behavior: 3 Insights You Need for Building Predictions

Many businesses are trying to make it big. Very few do. This is because they do not understand consumer behavior. The customer dictates how large you will grow. If a business stubbornly refuses to learn what customers need, they will respond in turn, limiting growth. It is essential that the business know what the customer is actually expecting. You will survive if you are brave. There are three things to keep in mind when making your business stand out from the pack.

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Business Analysis: What Are We Good at Doing?

What you are good at doing as a business will be a competitive advantage. A shoemaker should not try to fly aircraft. A pilot should not try to make shoes. When you try to do something that you are not naturally good at as a company, you will fail, bringing your company down with it. Make sure that you and your employees are functioning where they are best suited to function. Products and services are higher quality when they come from people who enjoy what they are doing.

The customer notices when a company cares about how its products are made. A good example is the difference between U.S. based airlines and those based in Asia. Asian airlines are known for their attention to service and customer comfort. Those in the U.S. are known for pinching pennies and stuffing their customers into tubes like cows. The managers of airlines in the U.S. would be better off working in a factory than in customer service industries. Know what you are actually good at doing, so you do not go bankrupt.

If you do not know what you are good at doing, one of the best things to do is to take a brain assessment test. Once you have the results, you can compare your code with the public charts to find what people like you are good at doing. There are lots of good sites that can give you analysis and recommendations based on your specific personality.

Finding Clients: Who Could Want What We Have to Offer?

This is just as essential as the first. Many times, a business is willfully ignorant about consumer behavior. They do not want to find their own market. They want to create it by force. They lobby their government to create an unfair market advantage for their own industry that drives up prices and lowers quality. Being willing to understand consumer behavior can save you and your customer a lot of pain. The people who desperately want your product will pay highly for it. Finding them is the challenge.

Steve Jobs saw that people in the United States are extremely addicted to entertainment and computers. He saw that they are bad at making such devices cheaply. He went to Taiwan and had a large company begin building iPods that had computers built in. The rest is history. The iPhone went on to make Apple one of the world’s largest companies, fed by greedy American consumerism. If you can see who desperately wants your product, you will corner the market.

Consumer behavior rests on what marketers call universals. There are universal desires that all people share. The best companies try to tap into as many of these as possible in selling their products. Examples of universals include food, shelter, clothing, water, survival, protection, and pleasure. If your company is selling these things, it will be far more effective in growing and finding a large market.

Competition: What Are My Competitors Afraid to Do to Meet Our Market?

Sam Walton saw that his competitors were afraid to buy in bulk and sell at low prices. Steve Jobs saw that his competitors were afraid to ask a foreign company to build their leading product. If you can see what your competitors are cowardly copping out of, you can succeed. Warren Buffett says that the foundation of his success as a billionaire was acting opposite his peers. Take advantage of the prejudices that your market competitors have. You can look again at the universals for clues.

Most businesses copy their customers’ own behavior. They too are desperate for food, shelter, clothing, water, survival, protection, and pleasure. If you are willing to do without some of these things, you will be finding advantages that your competitors are missing. Businesses that run a lean operation have the cash and flexibility to expand while others are begging for more loans. Thrive on minimalism. Do only what is absolutely necessary to survive. Do not have fancy company cars and a gourmet caterer. Save money and use it to capture the market that your competitors are not seeing clearly.

Apple spawned a whole range of imitators, but they captured the initial herd with the iPhone. This is because the harvest belongs to the innovator, not the imitator. Consumer behavior can be boiled down to the universals. Once you know the universals, you can cater your business to sell those things. If you are buying the opposite of the universals, and transforming them into popular things, your business will become gigantic. The challenge is pulling this art of transformation off. It takes pain and focus.

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Summing Up

These are just three traits that successful companies use to grow. You have to decide if you are going to copy them. It is not easy to stay on top. Consumer behavior is sometimes unpredictable. If you know the universals, you can have a good model. You have to be willing to adapt to the trends. Do not be caught screaming for help when the next recession comes along. Have the massive bank account and growing order list to meet it.

Remember to regularly read and refresh your financial knowledge. Warren Buffett says that one of the things he regularly does is just spend time thinking. Businesses that think are the ones that survive when others are gasping for air. They profit during the recessions by using saved money to buy up low priced assets.

Images from depositphotos.com.

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