Consumer behaviour is the study of the actions of an individual to understand what leads to the purchase of a particular product. Throughout this decision-making process, there are several factors influencing consumer behaviour. These factors don’t just relate to the obvious features of the product.
Some factors have a direct, measurable influence on the buying decision, while others are intangible. For instance, a consumer can compare the size, colour, design, and pricing of a product. In the case of intangible factors, the consumer takes into consideration aspects like the relationship between the consumer and the supplier and the product’s perception.
Marketers try to study consumer behaviour to improve marketing strategies and brand building. If brands can comprehend the factors that influence the consumer purchase decision, it can help in positioning and segmenting products and encouraging consumers to purchase.
Here are the 5 factors affecting consumer behaviour:
1. Psychological Factors
Human psychology has a vital role to play in shaping consumer likes and dislikes. It is not easy to measure these factors, but they are powerful enough to affect a buyer’s decision. The important psychological factors are:
An individual’s level of motivation influences buying behaviour. According to Maslow’s need hierarchy theory, a consumer has basic needs, security needs, social needs, esteem needs, and self-actualization needs. The basic needs and security needs are more important and act as a motive to purchase products and services.
The customer’s perception is another factor that affects purchase decisions. A customer obtains information about a product and brand and then interprets it to form a meaningful conclusion. The information for consumer perception is collected by the customer through advertisements, reviews, promotions, social media feedback, etc.
Learning happens after a consumer purchase a particular product. Learning is dependent on skills, knowledge, and intention. The skill to learn is developed through practice. When consumers keep purchasing products, they excel at the skill to evaluate products. Knowledge and intention come through experience.
Learning can be conditional and cognitive. In conditional learning, the consumer is exposed to a particular stimulus, which refers to the repetition of a similar situation until he or she learns a specific response towards it. On the other hand, in cognitive learning, the consumer uses his knowledge, intention, skill, attitudes, and beliefs to use the product as a solution and seek satisfaction from it.
- Attitudes and Beliefs
Every individual carries certain attitudes and beliefs which affect the purchase decision. The response towards a particular product or brand is based on this attitude. Brand image is also formed under the influence of such consumer attitudes and beliefs. As a result, brand strategy agency will try to design marketing campaigns after studying the attitude and belief of a customer.
2. Social Factors
Human beings are surrounded by the society comprising several people with different choices, experiences, and interests. In an attempt to be socially accepted by this society, humans try to imitate other humans. Consequently, their buying behaviour is significantly impacted. These factors are categorized as social factors.
Your family influences your preferences and behaviour. In your childhood, you see your parents purchasing certain products and services. As you grow up, you continue to purchase the same. A family creates an environment in which the child evolves, develops a personality, and acquires values.
- Reference Groups
A group of people you associate yourself with is known as the reference group. Mostly, people belonging to a particular reference group have similar buying patterns and influence the purchase decisions of each other.
- Roles and status
The role and position of an individual also affect the buying decision. For instance, the CEO of a company is expected to buy products that approve of his status. Similarly, the employees and staff of that company will have different buying preferences. Marketers must comprehend the role and position of the target audience as they endorse and advertise products.
3. Cultural Factors
An individual learns basic values, behaviour patterns, choices, perceptions, needs, and wants from the community he belongs to. Consumer behaviour is also influenced by the culture of that particular community. These are recognized as cultural factors influencing consumer behaviour.
A consumer observes and learns about the culture of their family from a very young age. This includes basic values, needs, wants, perception, and preferences. The culture varies from country to country and from region to region. Depending on the culture one belongs to, there is a strong influence on purchasing patterns.
Every culture has several subcultures. A group of people from a subculture follow the same set of values and beliefs. People in a subculture can come from varied religions, geographies and nationalities.
- Social Class
Social class plays a crucial role in consumer behaviour. Social class is determined by income, occupation, educational qualification, family background, and location.
4. Personal Factors
Factors specific to an individual buyer also influence buying behaviour. These factors differ from one person to another and form a different set of attitudes, mindsets, and perception. The personal factors your brand strategy agency needs to watch out for include:
A person’s buying behaviour is greatly affected by his age. People are attracted to different things based on what stage of the life cycle they are in. Teenagers are more interested in purchasing colourful clothes and trending products. On the other hand, middle-aged people focus on purchasing a vehicle, a house, and other investments.
A person’s income influences the purchase decision. The income is a determinant of the purchasing power of an individual and is directly proportional to the purchasing capacity. A consumer with higher disposable income will spend on expensive and branded products, whereas a lower-income individual will only spend on the basic needs like groceries and clothing.
The occupation of a person also influences consumer behaviour. A person is likely to buy products and services that suit their role and profession in society. For example, clothing preferences for a lawyer will differ the clothing preferences of a doctor.
5. Economic Factors
Lifestyle refers to the way an individual spends his life. Lifestyle develops values, interests, likes, dislikes, and opinions that further impact buying behaviour. For instance, a person following a healthy lifestyle will purchase more organic products and fitness equipment.
The economic situation of a country also influences consumer buying habits. In a strong economy, there is greater money supply and consumers have a higher purchasing power. Conversely, a weak economy impacted by unemployment reflects lower purchasing power for consumers. The following economic factors influence consumer buying behaviour:
- Personal Income
An individual’s personal income determines what they will buy. People with higher disposable income have more purchasing power and tend to purchase more goods to improve their standard of living. Disposable income refers to money that is left in hand after all basic needs, taxes, and other necessary expenses are met.
- Family Income
Family income is the total amount of money earned by all members of the family. If more number of people are earning in the family, there is more income for shopping and the consumer buying behaviour changes. A family with surplus income tends to spend on luxurious items and desire-based expenses, which they otherwise would have not been able to do.
- Consumer Credit
Easy credit has a positive impact on buying behaviour. When customers have a chance to avail credit in the form of bank loans, easy instalments, credit cards, and other such offers, they tend to purchase more of luxury and high-end items.
- Liquid Assets
Liquid assets include cash in hand, savings, and securities. A customer who has liquid assets knows that they can be converted into cash easily and thereby comfortably spends on luxury goods.
One of the important economic factors affecting consumer behaviour is an individual’s savings. If a consumer wants to save more, his spending capacity will reduce and he will tend to purchase basic needs only.
These are some of the essential factors that influence a buyer’s purchase decision. Marketers must keep these in mind and take strategic marketing decisions.