How Consumer Behavior Impacts Business

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Consumer behavior is the study of how people make decisions in terms of what they need, want, buy or how they act in regard to a product, service or company. It is important to understand behavior and preferences in order to evaluate how someone might respond to your product or service. Understanding consumers allows organizations to develop a plan targeted towards their wants and needs, as well as identify opportunities that are not currently met by the existing product or service offered.

Three Factors of Consumer Behavior

To fully grasp how consumer behavior affects business, it is crucial to understand the three factors of behavior that influence decisions.


To fully grasp how consumer behavior affects business, it is crucial to understand the three factors of behavior that influence decisions. These three factors include psychological, personal and social.


1. Psychological Factors

Psychological factors relate to how everyday stimuli influence our judgment and thought processes. These factors include perception of a need, attitude towards a product or service and a person’s ability to understand information. Because everyone processes information differently, how consumers respond to a product or service will vary depending on their perceptions and attitudes. Psychological factors greatly influence decisions, so in order to develop a campaign that aligns with the needs of your target audience, you will need to understand what drives them.

2. Personal Factors

Personal factors are specific characteristics a person possesses that differ from other people within the same group. Take you target market for example. Everyone within this audience will typically have one common characteristic whether it be age, gender, race, background, culture, or any other attribute that makes them who they are. Each person, however, has their own habits, interests and opinions driving their decisions, making them different from the other members within the same audience. As a marketer, it is important to pay attention to these characteristics because the differences among individuals can vary greatly.

3. Social Factors

Social factors involve the different aspects of life that influence our behavior. Social influencers are seen constantly throughout one’s daily life and include a person’s family, school or work environments, social interactions, and any group someone affiliates with. Social factors are important to take note of; however, they do tend to be the hardest to analyze due to the high level of diversity these characteristics possess.

Impact on Business

Understanding consumer behavior is important for the development of a business because these behaviors ultimately control the type of marketing strategy being implemented. Knowing the behaviors of your target market and how they change over time will not only allow you to continuously improve your product or service, but also improve the delivery process. To be successful in the market you are in, your business will need to know who is being targeted, what they want, how they can be reached, and how they might react to your product or service.




To better understand the behaviors of your audience, it helps to conduct sales forecasts (the study of past consumer behaviors to determine future sales) and utilize different research methodologies, such as surveys. The amount of effort an organization puts into these studies ultimately impacts how well they will reach consumers and appeal to their needs. Consumer behavior is something that is constantly changing, so it is important for businesses to put in the time and effort to better understand these behaviors. An organization’s success depends on it.