Consumer insights

Businesses use consumer insight to gain a deeper understanding of how consumers think and feel. Through analysing consumer actions and buying patterns, businesses gain insight into the behaviours and motivators behind purchases. It works to seek knowledge as to why people buy certain products over other brands and the motivators driving those preferences.

Research into consumer insight includes:

• Understanding the market
• Understanding competition
• Current and future consumer needs
• Continuous improvement for brand and products.

Businesses need to continually reflect on connecting to their target audience's beliefs and values. They create a connection and relationship between the products they sell and the consumers they aim to attract.

Example: A coffee business must find common values with their consumers. They may advertise their quality, flavour and where their beans are grown; however, to make an impact, they will need to identify what makes their product different from other coffee brands on the market.

Think of reasons why people drink coffee. Suppose businesses dig into the beliefs and values held by their target audience.

In that case, they will understand that many people drink coffee to focus on starting their day, providing a comfort drink on a cold morning, or boosting energy right before an afternoon slump. Ultimately coffee may be embedded as part of an individual’s routine.

If they can tap into this, then a powerful message is sent to support the consumer's motivations instead of simply marketing the characteristics of the coffee bean itself.

In a world where the market has become so saturated with various products, it is essential to stand out, which means understanding consumers' motivations, values, and attitudes.

 

Individuals buy products and services all the time.

The “why” behind these decisions is what marketers aim to unravel when they set out to measure consumer beliefs, attitudes, and motivation and how they impact buyer decisions.

Attitude and beliefs

Attitudes are a settled way of thinking or feeling about something.

Attitudes are learned and often formed early and influenced by family, friends, celebrities, advertisements, culture, values, and personality. They can either change or persist over a long period. As a result, this can impact the purchasing decisions made by consumers through personal experience or information consumed.

People have attitudes towards politics, large corporations, sustainability, advertisement, social concerns, and products and services. They are typically learned through experience and can be very difficult to change. Hence, businesses try to create products that fit into existing attitude patterns rather than attempt to change the attitudes of their consumers.

Tri-component attitude theory

According to the tri-component attitude theory, three major elements suggest attitude can only exist if all three components are involved. These are:

• Cognition
• Affect
• Conation.

1. Cognition refers to a person's knowledge and perceptions based on experiences and information gathered from various sources and are often based on the person's beliefs around attributes that will drive a specific behaviour.
2. The affect component is concerned with emotions and feelings and captures how a person evaluates or rates a product, experience or person.
3. The conative component is related to the likelihood that the person will act or behave in a certain way regarding the attitude object. Marketing research is often considered buying intentions (Schiffman & Wisenblit 2019).

An example of how attitude may impact a consumer purchase may include convincing meat lovers to try a plant-based burger that claims to taste ‘’ just like meat” but better for the environment. It would be a hard product to sell to individuals that have had the attitude for many years that nothing can replace the benefits and taste of meat.

Attitudes are usually thought of as either liking or disliking something; they often have some direct form of action between the consumer and a product and how they respond to certain brands. On the other hand, beliefs are feelings and opinions about something but aren't necessarily action-driven.

For researchers, it may be difficult to collect this kind of data as certain beliefs may be found contradictory.

It may include the following examples:

• Identifying that McDonald's isn’t the best meal option, whilst also still knowing that their burgers are consistently tasty and convenient, will ultimately make many individuals choose McDonald’s over other fast food options
• An individual who spends their year finding sustainable options and dedicating their time to helping the environment may seek out natural Christmas trees to decorate with the family for Christmas.

These are some reasons why consumer beliefs may be hard to measure effectively. Through research, marketers can better understand their market and the consumer audience.

Motivation

Motivation is the desire to do something.

In marketing, motivation occurs when consumers want a need filled. Once a need has been activated, a state of tension drives the consumer to attempt to reduce or eliminate this need. Marketers will aim to provide products that meet these needs and desires. If satisfied with their purchases, consumers will be motivated to return. If not, they will seek to fulfil meeting their needs elsewhere.

The diagram below depicts the motivation process, which begins with unmet wants or aspirations that cause stress (tension). This will lead to a specific behaviour impacted by cognitive processes and learning (experiences) that leads to achieving a goal or satisfying a need. As a result, once the need is met, the stress or tension is reduced (Schiffman & Wisenblit 2019)

When marketers successfully understand this, they can

• Provide an emotionally valued proposition that is aligned with fulfilling the need or tension consumers have identified and are trying to fulfil
• Understand when and how to launch communications to reach their target consumer group effectively • Effectively develop new products to fill gaps in the market.

Due to the complexity of psychological motivators, research needs to be undertaken to identify and understand consumer motivations.

When it comes to researching information about the marketing environment, data needs to be collected. Businesses spend money and have teams dedicated to finding out what motivates consumers to shop, where and how, and whether they are loyal to brands or shop around. They will then use this information and look at ways to direct their marketing to target existing and new customers.

The consumer insight research process can be broken down into the following steps:

Develop objectives

• Identify why the research is being conducted
• What do you want to find out?
• What do you need to understand about your consumers?

Collect primary data

• Primary data is collected to answer a specific question or achieve a set of objectives
• Primary data is usually collected by the business themselves or through market research companies (Kotler & Armstrong 2021).
• Primary data collection depends on market research and its objectives. However, popular methods include surveys, focus groups, and interviews.

Collect secondary data

• Secondary sources are previously collected and readily available information. These can come from various sources, including google, email systems and other sources. Chances are a business will have your customer data sitting in their repository every time you transact and interact with them. They will use this information to inform their decisions
• This will help you understand if data is already on hand and if any pieces of information are already available that can be used to make decisions about further research.

Analyse the results

• Data is analysed and collected to understand consumer insight
• The report is prepared.

The following video explains why and how market research is carried out for more information.

Collecting data

If you visit just about any website these days, you will be asked to accept or decline a warning about website cookies. Cookies are text files with small pieces of data used to identify your computer as you use a website or computer network.

These cookies track an internet user’s journey across the internet, create a digital footprint, and are a marketer’s treasure trove of data that can tell you so much about your consumers’ needs.

They are what sites like Google Analytics, Facebook Audience Insights and your email automation tool rely on to give you invaluable data for your consumer analysis. A crucial component of being a great marketer is ensuring that your analytics and metrics tools are set up correctly. Without your tracking and metrics tools set up, you do not have your tools of the trade.

Customer insights are interpretations of quantitative and qualitative data gathered from customer feedback and other informational sources, compiled and analysed to inform business decisions.

The data that you collect will be both qualitative and quantitative.

Quantitative vs qualitative research

Quantitative and qualitative research are used when collecting and analysing data.

• Quantitative research deals with numbers and statistics.
• Qualitative research deals with words and meanings.

Quantitative research

When using quantitative research methods, researchers use mathematical techniques to conclude. These may include percentages, averages, frequencies and fixed (closed-ended) responses. It provides researchers with the ability to categorise information in numerical form.

Some examples of quantitative research are as follows:

Google Analytics

Google Analytics is a crucial tool for marketers that lets companies measure advertising and marketing return on investment and lets you track page views, visitors, link uses, the use of tracking codes and much more. It is used by installing a code on your organisation’s website that corresponds with your Google Analytics account code. Once done correctly, Google can track your website traffic on a live dashboard. Marketers can use this information to see what pages are popular, what links are working, whether blog pages are being visited, if visitors stay on pages for long, and much more.

Click on the video below to tell you more about google analytics and how it is used to track consumer activity.

Facebook Audience Insights

If your organisation does any advertising on Facebook, Instagram or any other social media platform, use Facebook Audience Insights. It is very similar to Google Analytics, however, it will tell you all about your business Facebook page, which is very important if you are trying to build a following on that social media platform.

Dashboards allow you to monitor:

• Historical trends
• Real-time information
• Monitors brand mentions
• Shows customer signs ups
• Number of followers
• Monitors traffic and clicks.

Email Automation Program

Most organisations with a marketing department will have an email automation program. The tools available to you for measuring consumer behaviour can become quite advanced in these programs. It will depend on the system you are using as to the specific features you have, but almost all programs will let you measure the following useful metrics:

• Open rate – this is as it sounds, the percentage of people who opened the email
• Click-through rate – the percentage of email recipients who clicked on unique clicks on a link from your email
• Unsubscribe rate – the percentage of contacts who unsubscribed from your list because of the email
• Complaint rate is the percentage of people who marked your email as spam. You want to avoid these as much as possible. People are most likely to complain if you do not include an unsubscribe link in your emails, if you email too frequently, if you send irrelevant content, or if you purchased an email list
• Conversion rate – the percentage of people who completed your desired action, purchasing a product or visiting your website. Many email programs allow you to set a goal to track what is counted as a conversion
• Bounce rate – the bounce rate is the percentage of people that did not have the email successfully delivered to their inbox.

Email automation systems allow quite advanced rules and customisation to ensure that different customer groups or individual customers receive a highly personalised journey.

Some examples of email automation programs include:

• Send in blue
• Mailchimp
• Mail jet
• Drip
• Convert Kit

Qualitative research

Qualitative research seeks an in-depth, open-ended response rather than pre-determined, clear-cut answers such as yes or no. In marketing, this type of research encourages consumers to share their thoughts on a product or experience. For example, a researcher may ask consumers what they think when shopping for food. One consumer may refer to the convenience of location, while others may focus on product quality.

Qualitative research

• Surveys
• Informal feedback
• Focus group
• One-to-one interviews or feedback.

Surveys

Many organisations gather surveys from their clients at many touchpoints. These are often built into automation or sent out following an online checkout or after a completed service.

Informal feedback

Some organisations have a process by which informal feedback provided by consumers can be captured. Feedback can be provided over the phone or in person. Feedback might be recorded on a Feedback Register so the organisation can use the comments for consumer analysis and improvement.

Focus groups

A focus group is a small group of consumers who analyse a product or service and provide feedback to an organisation. A focus group is usually representative of the wider population of the consumer group. A moderator facilitates the focus group to ensure discussion and open feedback amongst the group members.

One-to-one interviews or feedback

This is a conversational method of receiving feedback through open-ended questions. This method relies heavily on the researcher's expertise in asking the questions. They must probe the respondent with appropriate questions to get as much information as possible; it is a time-consuming strategy that is not widely adopted. Watch the following video for more information on how research can identify consumer buying patterns.

A question to ask yourselves is, “How would this information be useful to us?”

Raw data in itself does not tell us a story. We need to analyse it to gain insights that we can then act on. What are these actionable insights, you might ask? They could be used to develop a new product, improve an existing product, or create a more personalised customer experience. These insights allow us to understand our customers better and boost our products or brand.

Personalised marketing is not just about adding a name to the top of an email anymore, it is about making sure that the content your audience receives is relevant to them. Many companies use software to create highly customised email automation or ‘drip campaigns’ to take customers on a personalised journey to ensure that customers receive only relevant content. These can have a whole range of rules set up to drive things like:

• When a customer receives an email
• Which email do they receive?
• When they should receive a call from a salesperson
• When they should receive a special discount offer
• When they should stop receiving emails.

Reflect on this case study to see how the Jarvis clothes team has used every opportunity to personally engage with Kayla and motivate her to buy their products.

Below are more examples that demonstrate how different businesses use customer insights to deliver a more personalised customer experience:

Coca-Cola launched its famous "Share a Coke" campaign to allow more to invite and reach more people within the community. Consumers could personalise their coke bottles by placing their names on the label.

Amazon’s personalization efforts use an algorithm that uses consumer behaviour patterns to create “recommendations for me” to showcase items that consumers may be interested in based on their search and buying history.

Spotify is another great example. It curates a “discover weekly” playlist that the user may like based on the listener's listening to. Below is a diagram that indicates the process that Spotify takes to personalise its music to consumers.

1. Consumers will listen to and save songs to their playlist along with billions of other users
2. Spotify will identify similar songs that appear through various playlists.
3. Spotify will then find songs that fit your profile but that you haven’t listened to
4. It will create a weekly discovery playlist for you to listen to.

This level of personalisation is one of the many benefits of conducting consumer insight research. It is an effort to let consumers know that you’re paying attention to them and that their expectations and interests are important.

The competitive environment affects the number and types of competitors marketers must face. Although these factors cannot be controlled, choosing strategies that avoid head-on competition is often possible.

The best way to avoid this is to find new ways to satisfy customers’ needs and provide value. The search for a breakthrough opportunity or competitive advantage requires an understanding not only of consumers but also their competitors.

Porter's “five forces”

One relatively recent approach to competitor analysis is using Porter's “five forces” framework. The idea is simple and relies on comparing the strengths and weaknesses of the company’s current target market and marketing mix with those that competitors are currently using. This model suggests that the profitability and popularity of industry are based on 5 factors:

• Competitive rivalry within the industry
• The threat of new entrants
• Risk of competition from substitute products
• Buyer power
• Supplier power.

The initial step in analysing the competition would be to identify potential competitors based on your advertising products and your target audience.

Competitive rivalry

Examines the strengths of current competitors (Hitt et al. 2015). Asking questions such as, how many rivals do you have? Who are your rivals, and how do their products and service quality compare to yours? When rivalry is high, customers can easily switch to other competitors, but there is less chance of switching when rivalry is low.

Supplier power

Supplier power is determined by how much power the supplier has to increase prices and reduce quality (Hitt et al. 2015). How many potential suppliers do you have? How unique is the product or service they provide, and how expensive would it be to switch from one supplier to another?

Buyer power

Buyer power reflects the buyer's power to drive the prices down or bargain for better quality (Hitt et al. 2015). How many buyers in the market are there? How important is the product or service to the customer? How much would it cost a customer to switch from one company to another?

Threat of substitution

Threat of substitution refers to the likelihood that customers can find a different way of doing what you do and purchasing products from different industries (Hitt et al. 2015). The questions to be asked are similar to those stated above for Buyer Power.

Threat of new entry

This is important because they threaten the market share of existing players. It is determined by one’s ability to enter a market. The less time and money it costs for a competitor to enter a company’s marketplace, the more the company can be weakened (Hitt et al. 2015).

The five forces are important as they identify the strengths and weaknesses of an organisation's competitive position. It will assist in understanding the firm’s competitiveness and profitability. Essentially, it determines where the power lies in the organisation (Porter 2008)

There are different types of competitors, depending on whether you are examining them from a specific or broader sense (Kolter et al. 2017). We will explore the following concept using a fast-food restaurant that primarily serves burgers.

Competitor types include:

• Direct competitors can be viewed as businesses that offer the same or similar products. For example, Hungry Jack’s and Grill’d aim to serve the same target market with the same product.
• Indirect competitors can be viewed as businesses offering a slightly different product, usually within the same product class (fast food). For example, KFC and Taco Bell specialise in fast food, but their main focus is not burgers but fried chicken and tacos.
• Replacement competitors can also be viewed more broadly to include other businesses that satisfy the same needs and wants. For example, other cafes or restaurants offer options that can satisfy the same need of hunger.

The following video will provide an example of how Porter's five forces can be used to analyse the competition.

When businesses can effectively identify the types of competitors they may face, the information used can be an advantage to help understand their consumers' thoughts, opinions, needs and behaviour.