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  • Essay / Economic Theories and Customer Behavior - 1503

    For businesses to effectively market products or services, it is necessary to understand how consumers behave and make decisions (Poon and Joseph, 2001). There are several theories related to this field, including economic theories as well as psychological theories. Previous studies on theories regarding consumer behavior have been developed through economic theory, for example the view that consumers move forward rationally to maximize their satisfaction in the purchasing process. More recent research shows that consumers are influenced by different types of reference groups, such as family, friends, advertisers and models. Terms like impetuous purchase, mood, situation, and emotion are more commonly applied to concerns about consumer behavior. All of these factors together form a comprehensive model of consumer behavior that describes both the cognitive and emotional aspects of consumer decision making (Solomon et al., 2009). Assael (1994) explains consumer behavior as the process of recognizing and evaluating the various components of a purchase and further explains that there are two broad influences that determine the consumer's preferred choice. First, the individual consumer's desires, awareness of brand distinctiveness, and awareness of alternatives are of importance in consumer decision making. Other factors that affect brand choice are consumer demographics, peer pressure, lifestyle, and personal characteristics. Second, environment has importance in consumer behavior, which includes culture, social class, and various groups. Assael (1994) also describes the reason why consumer behavior information is imperative for a company like ZARA, which can thus respond to consumer queries on time. Being responsive means that a business is accessible and willing to review its customers' needs as quickly as possible. ZARA achieved this as its products were shipped directly from the central distribution center to conveniently located and aesthetically pleasing stores twice a week, thereby removing the need for a warehouse and keeping inventories low (Christopher et al., 2004 ). Businesses and businesses should always put themselves in the shoes of their customers and strive to know their perceptions and thoughts about the products provided by the concerned company. This quality of compassion is very imperative and helps in motivating customers. This involves listening carefully and asking relevant questions, speaking the customer's language and adapting products to satisfy or meet the customer in the best possible way (Niinimäki, 2010).