Consumer Analysis - Definition, Importance, Steps & Example
What is Consumer Analysis?
Consumer analysis is the process where information about the consumer is found out from market research like the needs of the consumer, the target market and the relevant demographics so that this information can be used in market segmentation for further steps of market research. It is very useful in predicting consumer behavior.
Importance of Consumer Analysis
Consumer is the most important entity in the entire selling and marketing process and analyzing consumer is a very important aspect of market research.
Objectives of consumer analysis are to find out information about:
Profile of the consumers
This includes demographic, economic, social, geographical characteristics of the consumer and any other special interests of the consumer that are relevant. It also includes the buying process of the consumer i.e. factors like the decision making unit, time and frequency of purchase, how the consumer makes the purchase and the method of payment. The former is called demographic analysis and the latter is called behavioral analysis.
Benefit gained by the consumers
These include functional benefits, psychological benefits, high and low involvement benefits depending on the products, and user & purchaser benefit depending on whether it is a B2B or B2C customer.
Market
A market is the group of customers who gain the same benefit from a product. Market can be undifferentiated or differentiated. In case of differentiated markets, market segmentation can be based on geographic, demographic or psychological segmentation. Whichever the market is, it has to be homogeneous, consistent, executable and profitable.
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Steps in consumer analysis
Step1: Overview of the industry
Step2: Identifying and describing demographics of the customers
Step3: Project future changes
Step4: Determine and describe consumer buying behavior
Step5: Competitive analysis
Step6: Use information about industry, customer and competitors determined above to identify gaps in the market
Wheel of consumer analysis: It is a model describing the key factors in understanding consumer behavior and hence developing a marketing strategy.
Example of Consumer Analysis
Nike shoes has a wide range of products designed for different segments of its consumers like shoes for sports persons, basic sports shoes for gym, walking or running, tougher shoes for football players, etc.
Hence, this concludes the definition of Consumer Analysis along with its overview.
This article has been researched & authored by the Business Concepts Team. It has been reviewed & published by the MBA Skool Team. The content on MBA Skool has been created for educational & academic purpose only.
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