The consumer behaviour of a market plays one of the most crucial roles in deciding the success or failure of a business, whether it is small or large.
Invariably, a business becomes a successful entity through the revenue generated by selling the products or services. Hence, businesses invest heavily on time and resources in selling their products, and it is exceptionally essential to know that their offerings cater to the needs of their customers.
Deeply studying and appropriately adjusting to consumer behaviour are two key principles in marketing. Therefore, the marketer’s decision to introduce a product or service to a customer segment must be largely based on the understanding of how individuals select, decide, purchase, use, and dispose of such a specific item or service.
Hence, marketers must have a complete sense of how a customer segment thinks, feels, and makes buying decisions, which is required to strategize the business plan effectively. Researchers consider several important factors specific to customers when studying their buying behaviour.
Consumer behaviour is not merely what they purchase at a given time; it encompasses why they buy such a product, what influenced them to buy it, and how they use it.
For example, marketers must measure criteria such as personal, social, cultural, and psychological aspects before crafting business plans, as all these aspects can influence the buying decision.
By analysing behavioural patterns, the marketer can identify current or future trends, customer preferences, and possible leniencies, enabling them to develop marketing strategies, campaigns, and promotions. By staying updated on buying patterns, businesses can stay ahead of competition, a critical factor in the current fierce market dynamics.
Economic downturn
In the aftermath of the Covid-19 pandemic and the subsequent enormous economic downturn that followed, had a profound impact on buying behaviour in the Sri Lankan market.
Purchasing power diminished due to less disposable income, which led to a drastic reduction in the purchase of goods and services. Spending patterns shrank, financial priorities changed, consumption habits and the overall lifestyle routines were affected severely.
The main criterion for the ongoing behaviour change is due to the high inflation rate prevailing in the country that directly impacts customers’ purchasing power. Although the authorities, time and again, announce that the inflation rate is declining, ground reality reveals otherwise.
Due to the sharp rise of essential items needed for day-to-day living, the public across all social classes (except perhaps the most elite) were forced to cut back on many non-essential spendings such as travel, leisure, and entertainment. This can often affect the mental relaxation of many, which can indirectly lead to countless other issues.
In Sri Lanka and the entire world, millennials, born between early 1981 and 1996, and Generation Z, born between 1996 and 2012, are considered the most active and perhaps the most important customer segment that arguably is reshaping the consumer behavioural patterns.
Tech-savvy segments
While the two groups are identified as the largest and the most tech-savvy segments, they represent a substantial portion of the population.
In Sri Lanka, collectively, Millennials and Generation Z consumer categories that represent age groups from 18 to 44 consist of approximately 37% of the total population, numbering around eight million people. These figures can be extremely important to most Sri Lankan business entities engaged in consumer markets to manage their future marketing strategies.
The impact of the behaviour of these two consumer groups is crucial for Sri Lankan businesses, particularly to the retail sector. Millennials, although with a higher purchasing power, are more careful in their buying decisions in order to maintain common family requirements.
In contrast, Gen Z buyers are more impulsive and less concerned with traditional spending patterns. They also prefer integrating technology into every aspect of their lives, including how they shop and interact with brands.
Experts and researchers reveal that the current global trends are manipulated by the rise in consumerism that promotes consumer protection and promotion. A growing number of consumers make purchasing decisions predominantly based on sellers’ commitment to ethical practices, sustainability, and trust.
According to research, Millennials and Gen Z also most often prefer eco-friendly and socially responsible products and services.
Although the habit of “impulse buying” might not benefit the regulated financial goals of an individual, in Sri Lanka, the youth are increasingly getting into this buying behaviour. Even though some experts describe the habit as ‘negative’, impulse selling is promoted all over the world by retailers, small and large, predominantly through online platforms.
In Sri Lanka, due to the ongoing financial restraints, youth turn towards impulse buying more, seeking cheaper products, knowingly or unknowingly.
Customers also are heavily leaning towards experiential spending over physical possessions. The behaviour of valuing experience over possessions is becoming increasingly obvious. Investing more in leisure activities, dining, entertainment, and instant wellness activities that offer pleasure and more intense social engagement is the current tendency of consumers worldwide.
Powerful tool
This shift away from material goods reflects a deeper desire for the trend of memorable experiences. This means that the market for exponential products and services will increase heavily in the future.
Social media has already evolved into an extremely powerful tool that can influence buying decisions immensely. In Sri Lanka, platforms such as Facebook, Instagram, TikTok, and YouTube are accepted by the users not only as sources of entertainment but also as key channels for discovering new products and brands.
Social media marketing can significantly impact purchasing decisions, with many consumers relying on reviews, endorsements, and peer recommendations.
With the ever-increasing internet and mobile phone penetration, consumers across Sri Lanka prefer the convenience and variety of information offered to them to make buying decisions. Consumers are more likely to research through the freely available digital facilities before making a purchase, whether the amount spent is small or large. Also, they make purchases online, ranging from clothing and electronics to groceries and services. The growth of e-commerce platforms, along with improved digital payment systems, has facilitated this trend.
The bottom line is that understanding the customers and how they behave when they make buying decisions is of paramount importance to an organisation.
Therefore, deep insight into the changing behaviour in relevant segments can help businesses create effective marketing strategies and enhance communication to reach and influence customers.
Therefore, businesses in Sri Lanka must identify and respond to the shifts in consumer preferences and changing behaviour. Even though a sizeable portion of the consumers have already shifted to online platforms, even amid uncertainties in quality of service and the other negativities, the majority of Sri Lankan consumers still prefer brick-and-mortar shopping and physical experiences.
Changing purchasing patterns in Sri Lanka are driven predominantly by the economic volatility. This phenomenon impacts businesses considerably, primarily in the retail industry. As the customers curtail spending, those who adapt to the evolving trends have more chances of growing faster.
