Micro vs Macro: A Comprehensive Guide to Understanding Customers

This essay explores the critical concept of understanding customers, emphasizing its importance for business success through enhanced customer attraction and loyalty. It delves into both micro and macro aspects of consumer behavior, utilizing theories such as the Theory of Reasoned Action and the consumption function. The micro-analysis focuses on internal factors like cultural, social, and demographic influences, while the macro-analysis examines external factors such as economic conditions and geographical location. Examples from various industries, including Tesco, Tesla, and Hilton Hotels, illustrate how understanding consumer behavior leads to improved products, services, and overall business performance. The essay concludes by underscoring the necessity for organizations to comprehend consumer needs and expectations to effectively meet them, thereby increasing customer satisfaction and driving higher sales and profitability.

Understanding
Customers

Table of Contents
INTRODUCTION...........................................................................................................................1

Topic: The micro and macro aspects of Understanding Customers.
INTRODUCTION
The concept of understanding customers is related with analysing and reviewing the needs and
set expectation level of customers that they desire and wants to achieve from an organisation.
Further, understanding customers is vital and essential for all business organisation as it tend to
support higher business intend and productivity through attracting and catering larger number of
customers (Kim and Krishna, 2021). The current essay is based on the topic of micro and macro
aspects of Understanding Customers. Further, it includes a decision about the Concept of
understanding customers and its importance, Understanding the micro and macro aspect of the
consumer behaviour along with 1xamples of industry practice from different organisation.
Concept of understanding customers and its importance
It has been analsysed and seen that the understanding the customers is the key for success
for any business organisation as it sets out a base and framework for providing and delivering
suitable product and good services. Along with this, knowledge and understanding the customers
is also vital and significant as it helps an organisation to get more lead and have higher sales and
improved business productivity (Mateu Mateu, 2020). Along with this, it has been also seen that
an organisation need to be attentive to effectively understand the behaviour and purchasing
intend of its customers. Further, there are many potential rewards and benefits that are great and
tend to support improved performance for a business as it helps and supports the increase
customer loyalty and bring in new business through positive word-of-mouth recommendation
(Bravo, Catalán and Pina, 2021).
Further, understanding customers comprises of developing better knowledge and
underdoing about the consumer behaviour that tend to comprises of the study of individuals and
groups to understand all the activities which are tend to be associated with the purchase, use and
disposal of goods and services. Further, the Consumer behaviour consists of how the consumer's
emotions, attitudes and preferences affect buying behaviour. Thus, reviewing and analysing
consumer behaviour for understanding the customers’ needs and preference required a better
analysis and review of the various micro as well as macro aspects that tend to influence the
buying pattern and overall needs of consumer (Kim, Yoo and Yang, 2020). Along with this,
understanding customers and Consumer behaviour comprises of analysis and determining all the
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factors that tend to influences individuals to purchase certain products and support certain brand
based on the six principles of persuasion are reciprocity, commitment, pack mentality, authority,
liking and scarcity.
Understanding the micro aspect of the consumer behaviour
The micro aspects of the consumer behaviour tend to comprises and include the internal
factors that affects the behaviour and choice of an individual customer. Thus, implication and use
of the consumer behavioural theory has been made Created by Martin Fishbein and Icek Ajzen in
the late 1960s, the Theory of Reasoned Action centres its analysis on the importance of pre-
existing attitudes in the decision-making process (Choi and et. al., 2021). The application and use
of the consumer behaviour theory posits that consumers act on behaviour based on their intention
to create or receive a particular outcome. Further, it has been also seen and reviewed that there
are many micro factors that tend to have impact on the consumer behaviour (Chaudhary, Singh
and Sharma, 2021).
The main micro aspects of consumer behaviour on the basis of consumer behaviour theory
comprises of the cultural, social and demographic aspects of an individual that tend to affect their
decision making and buying intent. It has been analysed that the tourist belongs to a variety of
culture and belongs to different society that is directly reflected in there buying. Thus, analysing
the cultural needs and social aspects are vital micro factors for every organisation to effectively
understand and implicate about the consumer behaviour and there taste and preference level.
Further, other demographic factors such as income and education level also effects the buying
habits of the tourist (Agarwal and Mehrotra, 2018). It has been seen and evaluated that the higher
income level tourist is more attracted towards luxury and exclusive products while the low level
income tourist seemed to fulfil their needs and accommodation wants through buying and
catering affordable products and services. Thus, the consumer behaviour theory supports better
customer underdoing through determining that how people decide to spend their money based on
their individual preferences and budget constraints. Beside this, as a branch of microeconomics,
consumer theory shows how individuals make choices, subject to how much income they have
available to spend and the prices of goods and service therefore facilitates better understanding
of the micro aspects of consumer behaviour (Löbler and Wloka, 2019).
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Understanding the macro aspects of the consumer behaviour
Consumer behaviour is defined as a study of individual and organisational along with the
manner in which they utilise services and products. In addition to this it has been identified that it
is mainly associated with motivations psychology and behaviour. It is essential for an
organisation to identify consumer behaviour before developing products and services in order to
serve consumers as per their requirement (Ahn, 2021). Furthermore it has been evaluated that the
macro aspect of consumer behaviour is inclusive of external factors which have tendency to
impact upon behaviour of consumers manner. In this use of the consumption theory is been done
in order to evaluate the impact of macro environmental forces on the behaviour of consumers
and upon their decision making process. With help of this theory manner in which consumer
behaviour get influenced due to the impact of external factors can be evaluated the theory of
consumption identifies that consumer base their expenditure on informed and rational assessment
of the future and current economic circumstances. It has been underlined that macroeconomics
tend to utilise specified version of the optimisation framework which is known as permanent
income hypothesis. The theory of the consumption function identifies that consumer behaviour
get influenced due to various factors such as interest rate, income, wealth and more. Macro
aspects of consumer behaviour as per theory of consumption function states that different type of
elements like income level wealth interest rate affect consumer decision making and there
decision to buy a product or service (Ahn and Thomas, 2020). It has been evaluated that
consumers belongs from different geographical location and income level which reflects their
buying decision. In this it is essential for organisation to evaluate the income level of consumers
in order to provide them services and facilities as per their income this will effectively help in
attracting number of consumers. It has been identified that the theory of the consumption
function effectively supports to determine the manner in which consumers spend their money
according to their budget constraint. Along with it has been identified that consumer
consumption is mainly depend upon the income which reflects gradual adaptation of new
circumstances with the help of evaluating income level of consumers and providing services and
facilities accordingly their behaviour can be easily influenced.
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Furthermore it has been evaluated that this theory states an economic formula which duly
represents the functional relationship between gross national income and total consumption. This
theory was coin by British economist John Maynard Keynes state that with the help of taking use
of tracking and predicting total aggregate consumption expenditure behavioral aspects of
consumers can be influenced. Thus, with the help of emphasizing upon this theory but a form of
understanding can be identified which helps in determining consumer income level which assists
organisation to evaluate their spending and buying habits. This, helps in understanding macro
aspects of consumer behaviour in a well defined and effective manner.
Examples of industry practice from different organisation
Analysis and study of consumer behavior is essential for the organisation in every industrial
sector whether it is manufacturing, retail, automation, etc as it helps marketers for business
owners to have a proper understanding of consumer expectations (Cheng, 2020). There is
number of organization in different industries such as Tesco, Tesla, General Motors, Hilton
Hotel those who undertake advantage of evaluation of consumer behaviour in order to
understand needs and demands to provide the wide range of products and services as per their
need. With the help of consumer behaviour, all these organisation are influencing their mind set
and enhancing their satisfaction level in a well-defined and effective manner. Furthermore, it has
been evaluated that analysis of consumer behaviour assist organisations in different industrial
sector to maintain leaves and enhance overall sales and profitability. It also helps organizations
to long term sustainability in the industry.
CONCLUSION
As per the viewpoint of it has been concluded that it is essential for an organization in every
industrial sector of different sizes and scope to understand consumer behaviour in order to
determine the actual needs demand and expectations. This will significantly assist the company
to fulfill them ineffective manner and enhance their satisfaction level towards organizational
offerings. This report identifies that micro and macro environmental analysis helps organisations
to understand the needs and demands of consumers along with the factors which influence them.
It has been identified that with the help of having a proper understanding of consumer behaviour
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organisation can set a framework and can devise strategies to provide them a better form of
products and services which help the organisation to generate higher lead and sales in the
industrial sector.
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