What are the 5 Factors Influencing Consumer Behavior?
Consumer behavior refers to the selection, purchase, and consumption of goods and services for the satisfaction of their wants. Five questions support any understanding of consumer behavior: 1) Who is the market and what is the extent of their power regarding the organization? 2) What do they buy? 3) Why do they buy? 4) When do they buy? 5) Where do they buy? The answers to these questions provide the concept necessary when developing a marketing strategy. Some factors that influence consumer b...
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Consumer behavior refers to the selection, purchase, and consumption of goods and services for the satisfaction of their wants. Five questions support any understanding of consumer behavior: 1) Who is the market and what is the extent of their power regarding the organization? 2) What do they buy? 3) Why do they buy? 4) When do they buy? 5) Where do they buy?
The answers to these questions provide the concept necessary when developing a marketing strategy. Some factors that influence consumer behavior may be temporary and others are long-lasting. Let’s now look at some of the influences in more detail.
1. Psychological Factors
Factors based on human psychology are a major determinant of consumer behavior, and they are on four aspects:
Motivation is the inward drive we have to get what we need. Every person has different needs such as physiological needs, security needs, social needs, esteem needs, and self-actualization needs. Basic needs such as food, water, and sleep are in nature most pressing, while others are least pressing. Therefore, a need becomes a motive when it is more pressing to direct the person to seek satisfaction.
Customer perception is a process where a customer collects information about a particular product and interprets the information to make a meaningful image of it. There are three different perceptual processes, as follows:
Selective attention– is the process of filtering out information based on how relevant it is to you, and through which marketers try to attract the customer's attention.
Selective retention– where people forget information that contradicts their belief, even if it’s quite relevant to them. Here, marketers try to retain information that supports consumers’ beliefs.
Selective distortion– the misinterpretation of the intended message. Customers tend to interpret the information in a way that will support what they already believe, but not necessarily what the product provides.
Refers to the process by which consumers change their behavior after they gain information or experience. It doesn’t just affect what you buy; it affects how you shop. Learning can be either conditional or cognitive, as follows:
Conditional learning– when the consumer is exposed to a situation repeatedly, resulting in positive or negative consequences. Companies engage in conditional learning by rewarding consumers, which causes consumers to want to repeat their purchasing behaviors.
Cognitive learning– the consumer will apply his knowledge and skills to find satisfaction and a solution from the product that he buys. It occurs by associating a conditioned stimulus (CS) with an unconditioned stimulus (US) to get a particular response.
Attitudes are enduring “mental positions” or emotional feelings, favorable or unfavorable evaluations, and action tendencies people have about products, services, companies, or ideas. Since such beliefs and attitudes make up brand image and affect consumer buying behavior, marketers aim to change the beliefs and attitudes to positive ones through designing special campaigns.
2. Social Factors
People wish to be socially accepted, so they tend to imitate others including their purchases. Among the most important social factors are:
Buyer behavior is strongly influenced by the family they belong to. A person develops preferences from his childhood by watching family buy products and continues to buy the same products even when they grow up. Companies, therefore, are interested in which family members have the most influence over certain purchases.
Reference groups are groups (social groups, workgroups, or close friends) a consumer identifies with and may want to join. The impact of reference groups varies across products and brands. For example, if the product is visible such as dress or car, then the influence of reference groups will be high.
Roles and Status
A role consists of the activities that a person is expected to perform. Each role carries a status. For example, if a woman works as a finance manager, she plays two roles: finance manager and mother. Therefore, she is largely influenced by her role and will choose products that communicate it.
3. Cultural Factors
A group of people is associated with a set of values and ideologies that belong to a particular community. Therefore, cultural factors have a strong influence on consumer buying behavior. They include:
Culture is a handed-down way of life and is often considered the broadest influence on a consumer’s behavior. The influence of culture on buying behavior varies from country to country, therefore marketers have to be very careful in analyzing the culture of different groups, regions, or even countries.
A subculture is a group of people within a culture who are different from the dominant culture but share the same set of beliefs and values. Marketers can use these groups by segmenting the market into various small portions by, for example, designing products according to the needs of a particular geographic group.
A social class is a group of people who have the same social, economic, or educational status in society. To some degree, consumers in the same social class exhibit similar purchasing behavior. In this way, marketing activities could be tailored according to different social classes.
4. Personal Factors
Personal factors vary from one person to another, thereby producing different perceptions and consumer behavior. Some of the personal factors are:
Age and life-cycle have a potential impact on consumer buying behavior. Each age stage has different buying choices that differ from the other. For example, teenagers will be more interested in buying colorful clothes and beauty products, while middle-aged are focused on house, property, and vehicle for the family.
Occupation & Lifestyle
Lifestyle refers to the way a person lives in a society and is expressed by the things in his/her surroundings. Along with occupation, it makes up a great determinant of consumer behavior. For example, a vegetarian consumer would naturally buy vegan products instead of regular or meat-containing types of food. Similarly, the doctor will have different buying patterns than a farmer for example.
Personality describes a person’s disposition, helps show why people are different, and encompasses a person’s unique traits. The “Big Five” personality traits include openness, conscientiousness, extraversion, agreeableness, and neuroticism. Depending on these traits, marketers determine the consumer behavior for a particular product or service.
5. Economic Factors
Economic factors bear a significant influence on the buying decision of a consumer, and they can be on several aspects, as follows:
Country Economic Situation
Consumer buying habits and decisions greatly depend on the economic situation of their country. When a nation is prosperous, the economy is strong, which leads to a greater money supply in the market and higher purchasing power for consumers. In contrast, a weak economy reflects a struggling market that is impacted by unemployment and lower purchasing power.
The disposable personal income refers to the actual income remaining after deducting taxes from the gross income. When a person has a higher disposable income, the purchasing power increases simultaneously. On the contrary, when the disposable income reduces, parallelly the spending on multiple items is also reduced.
Liquid assets refer to those assets, which can be converted into cash quickly without any loss. When a consumer has higher liquid assets, it gives him more confidence to buy luxury goods. On the other hand, if they have fewer liquid assets, they cannot spend more on buying comforts and luxuries.
Consumer behavior is influenced by many things: psychological, social, cultural, personal, and economic factors. In turn, businesses, for the purpose of improving their profits, try to figure out trends so they can reach and influence the people most likely to buy their products in the most cost-effective way possible such as the layout of a store, music, grouping, and availability of products, pricing, and advertising.