Consumer Analysis: The Ultimate Guide

“What’s the one thing my business needs to do to be successful?” It’s a question asked around the world, at TED talks, conferences, bars, and boardrooms. No matter the size of your business, it’s something everyone wants to know. And the answer boils down to one thing, knowing your customers. 

And when we say knowing your customers, we don’t just mean understanding which of your products or services they’re buying. We mean really knowing your customers, with the help of in-depth consumer research. To do this, you need to undertake consumer analysis to understand who they are, what their needs are, where they’re hanging out online, and most importantly, what’s going to drive them to make a purchase.

But getting that level of information on your existing customers, nevermind any potential ones, can seem a bit daunting. So let’s break it down on how you can get there.

What is consumer analysis?

Consumer analysis is the process of understanding the behaviors, needs, preferences, and motivations of both existing and potential customers. It involves collecting and analyzing data to gain insights into who these consumers are, what they want, and how likely they are to buy from your business. This information is crucial when it comes to tailoring products, services, and marketing strategies to meet the needs of your target audience effectively.

Why consumer analysis is important

Consumer analysis is crucial for a whole heap of reasons, as it provides your business with valuable insights that can have a huge impact on success. Let’s recap on some of the key reasons: 

1. Understand customer needs and preferences: By analyzing consumer behavior, you can identify what your customers want from your business. This allows you to develop products and services that meet customer needs, leading to higher customer satisfaction and ultimately, brand loyalty.
2. Target your marketing: Segmenting your audience to create more targeted and personalized marketing campaigns ensures the right message reaches the right people, skyrocketing the effectiveness of your marketing efforts with better ad performance and greater ROI.
3. Improve your customer experience: Understanding your customer’s purchase journey and their pain points helps your business to enhance the overall customer experience. By addressing issues and optimizing touchpoints, you can create a smoother and more satisfying experience for your customers, as well as reducing friction in the funnel.
4. Gain competitive advantage: By conducting consumer analysis you can uncover insights into how consumers perceive your competitors and how your business stacks up against them. You can then use this information to differentiate your offerings and nab that competitive edge.
5. Make informed decisions: Undertaking consumer analysis means you can make more informed, data-backed decisions on everything from product development and pricing strategies, to media planning and ad targeting. This will reduce the risk of costly mistakes, and increase the likelihood of success.
6. Retain your customers: By understanding the factors that drive customer loyalty and satisfaction, you can implement strategies to keep your  existing customers coming back for more. 
7. Seize market trends and opportunities: Staying informed about market trends and emerging opportunities allows your business to adapt quickly and capitalize on new market conditions by staying ahead of the curve.

What are the key components of consumer analysis?

Before you get started on your customer analysis, here’s a few pointers on the key elements to dig into:

Demographics

Let’s start with the basics: demographics are characteristics used to categorize and analyze groups of people such as:

• Age: Determine the age range of your customers. Are they mostly young adults, middle-aged, or seniors?
• Gender: Identify the gender distribution among your customers.
• Income: Understand the income levels of your customers to tailor your pricing strategy and targeting.
• Education: Knowing the education background can help in crafting marketing messages.
• Location: Analyze where your customers are located to optimize your ad spend and focus your marketing efforts.

Psychographics

Psychographics take defining characteristics to the next level. Here, we group people based on their attitudes, aspirations, values, and interests. Psychographics dig deeper into consumer behavior and preferences, such as:

• Lifestyle: Take a look at the lifestyle choices of your customers, like their health consciousness, hobbies, and interests.
• Values and beliefs: Understand what your customers value and believe in, such as environmental consciousness or social responsibility.
• Self perceptions: Consider personality traits like risk aversion, openness to new experiences, and social behavior.

32% of internet users say they’d be motivated to promote their favorite brand online if it’s something that’s relevant to their interests.

Purchase behavior

Purchase behavior is the decision-making process a consumer goes through, from recognizing a need or desire, to making a purchase and beyond.

Understanding purchase behavior helps your business tailor your marketing strategies, improve customer satisfaction, and increase sales.

The main elements to know are:

• Brand discovery: Explore how and where customers find out about your brand.
• Frequency of Purchase: Analyze how often customers buy your products.
• Average spend: Determine the average amount customers spend per transaction.
• Product preferences: Identify which products or services are most popular among your customers.
• Buying channels: Understand whether customers prefer to shop online, in-store, or through mobile apps.

31% of consumers say they usually find new brands through TV ads, compared to 17% who find them via pre-roll ads.

Brand attitudes

Brand attitudes are how customers perceive your brand and others. You can measure this as part of your brand health tracking by looking at:

• Brand loyalty: Measure how likely your customers are to buy from your brand consistently.
• Perception of brand quality: Understand how customers assess the quality of your products or services.
• Brand associations: Identify what attributes or values customers think of when it comes to your brand.

Online grocery shoppers are more likely than average to say loyalty schemes would most increase their likelihood of buying a product.

Online Behavior

Understanding how your customers behave online, how they search, and how they shop will show you which platforms your brand needs to be on, where you need to optimize your website, your ads strategy and your social and media plans. Key things to understand are:

• Website traffic: Analyze metrics such as page views, session duration, and bounce rates on your website.
• Search behavior: Understand what keywords and phrases customers use to find your products or services, or how they’re searching online.
• Conversion Rates: Measure the rate at which website visitors convert into customers.
• Consumer habits: Discover where they spend their time online e.g. gaming, or browsing, find out what news sites they read, or podcasts they listen to.

Today, more consumers discover products via ads on social media, updates on a brand’s social pages, or social media recommendations, than via search engines.

Social media habits

Knowing where your customers hang out on social media, and what they’re using different platforms for can help you zero in on which fit your business, and make sure you’re crafting the right messaging. The things you need to know are:

• Platform usage: Identify which social media platforms your customers use most frequently.
• Engagement rates: Measure how customers engage with your social media content (likes, shares, comments).
• Sentiment analysis: Analyze the feelings behind social media mentions regarding your brand.

Combining all of these different aspects of customer analysis provides a bird’s eye view of your customers. 

How to conduct customer analysis

So we’ve talked about what consumer analysis is, now let’s get into the good stuff: how to actually go about doing it. And honestly, it’s pretty simple when you get down to it. Let’s walk through the steps.

1. Choose a tool or platform to gather your insights 

First, you need to gather data points and insights on your target audience. This can include all or some of the components we included earlier, depending on the level of granularity you need. There’s a lot of ways you can do this, either through surveys, interviews, focus groups, observation, or analyzing existing first-party data.

2. Define your ideal customer/audience

Next, you need to establish who you want to target with your product or service. This will be the group you’ll focus on, be it one you know well or a brand new audience you’re keen to tap into. 

2. Choose a tool or platform to gather your insights 

It’s time to gather data points and insights on your target audience. This can include all or some of the components we included earlier, depending on the level of granularity you need. There’s a lot of ways you can do this, either through surveys, interviews, focus groups, observation, or analyzing existing first-party data.

This is where a consumer research platform, like GWI, comes in handy. Having a wealth of consumer insights right at your fingertips takes the heavy lifting out of data collection, and gets you instant answers about your chosen audiences.

3. Uncover brand preferences and purchase drivers

Now, you can dig into all that data you’ve uncovered to really understand those consumers, what they like, which brands they use, what they want from those brands, and what’s going to influence them to make a purchase, including things like price, quality, convenience, and brand loyalty. You can use this information to develop products that will really hit the mark, campaigns that move the needle, and save you bags of money on your ad spend. 

4. Understand consumer pain points

Find out what’s front of mind for your consumers when it comes to their attitudes on things like representation in ads, or the state of their personal finances.

Knowing what stands out for your audience will give you the right info to build campaigns that really resonate.

Here you can begin to map out the various stages your potential consumers go through, from awareness to purchase and post-purchase, to identify pain points, and opportunities to enhance their customer experience.

5. Look for emerging trends you can tap into

Keeping up with the latest consumer trends and attitudes towards things like emerging tech can help uncover aspects of your audience that you wouldn’t have already known. For instance, if your target audience is baby boomers, you might write off using an influencer campaign to target them, but our data shows that the number of baby boomers who follow influencers has climbed 17% since Q4 2022. Using insights like this in your marketing strategy can make sure you’re ahead of the curve when it comes to the competition, but also speaking to your potential customers in the way they want. 

6. Get eyes on the competition

Next, you need to understand how consumers perceive competitors’ products and services, their positioning in the market, and then identify your strengths and weaknesses so you know where you stack up to the competition. From this you can identify gaps in the market, and where you can best aim your marketing efforts to win customers from your competitors. 

7. Build your consumer profile 

From all of this data you can create detailed consumer profiles, or personas, of exactly who it is your targeting, including information about their demographics, psychographics, needs, and behaviors. This can act as your blueprint that all teams can refer back to, keeping all of your marketing efforts  aligned, consistent, and grounded in data.

8. Develop a marketing strategy

And that’s it. Now you’re ready to feed all of those insights into your marketing strategy to develop tactics and strategies that you can be confident are going to make waves with your target audience. 

So there you have it, how to hack your consumer analysis so you can make more informed decisions about marketing strategies and product development, stay ahead of your competition, grow your customer base, and better meet the needs of your customers. Consumer analysis should be ongoing, you need to make sure you’re monitoring feedback, checking your profiles still fit, and adjusting your strategy accordingly. And the easiest way to do that is with a consumer insights platform at your fingertips.