5 Major Factors Influencing Consumer Buying Behavior

Understanding the major factors influencing consumer behavior is crucial for businesses aiming to thrive in today’s competitive market, shaping consumer decisions, from psychological to social, cultural, personal, and economic influences.

This article breaks down the main factors that affect how people buy things. We’ll share tips on how businesses can use this knowledge to meet their customers’ needs better.

What is Consumer Behaviour?

The study of consumers and the methods they utilise to select, use (consume), and dispose of goods and services, as well as the emotional, mental, and behavioural responses of consumers is known as Consumer Behaviour. Understanding consumer behaviour is essential for firms to develop powerful marketing tactics that may affect customers’ decision-making processes.

It is a psychological process as it is all about the consumer’s emotions. In this process, the customer initially recognises the need for the product and then seeks a method or medium to meet these demands by making buying decisions, such as deciding whether or not to purchase a certain product. Then he checks the facts, makes a strategy, and executes the buying plan. Consumer behaviour is psychological in the sense that it is human behaviour, and it may vary with even the least shift in the market, atmosphere, or trend.

5 Major Factors Influencing Consumer Behaviour

Here is a list of five major factors that shape the way consumers choose and use products:

1. Cultural Factors

The biggest and deepest influence on consumer behaviour comes from cultural factors. It impacts consumer behavior by setting expectations and norms that dictate buying habits. This group of factors mostly consists of broad culture, subculture, and social class culture.

a) Broad Culture

Culture is a highly complex conception of human activity as it includes human society, the roles that society performs, how society behaves, and its values, traditions, and conventions. Culture must be examined since it has a substantial influence on consumer behaviour.

b) Subculture

A subculture is a group that shares the same beliefs, customs, and values. They are the nation, religion, racial groupings, and individuals who live in the same geographical area.

c) Social Class Culture

Every culture has a social class, according to society. It is essential to understand what social class is being targeted because, in general, a social class’s purchasing habits are relatively similar. A group of customers‘ social class is determined by their income and other factors.

For Example,

In India, McDonald’s offers a range of vegetarian and non-beef products to respect the dietary habits and religious beliefs prevalent in the country. Items like the McAloo Tikki burger, a spiced potato-based burger, are specifically designed to appeal to Indian consumers.

2. Social Factors

Consumer Behaviour is also influenced by social factors. A number of social factors, including family, reference groups, and roles and statuses, have a significant impact on how consumers respond to products, brands, and businesses. To effectively meet their requirements, marketers must examine these social factors of their target market:

a) Family

One of the most significant social elements influencing purchasing behaviour is the family. Where there is a joint family structure, where children live with family for a longer period of time, this is more important. Values, customs, and tastes are innately passed on from parents to their children.

The most significant primary reference group is made up of family members. Family is where a person learns their values, including those related to religion, politics, ambition, self-worth, love, and respect. One’s behaviour is influenced by needs, choices, buying habits, consumption rate, and many other factors that are determined by the family.

b) Reference Groups

A reference group is a group of individuals with whom a person identifies. The reference group’s members typically have similar purchasing habits and influence one another.

c) Income Level

Consumer demands and wants are influenced by income. The preferences of wealthy and poor customers are very different. Between wealthy and less wealthy consumers, there is a significant gap in terms of quality, brand image, novelty, and pricing. It is essential for a marketer to understand the expectations of customers with different income levels and then target them accordingly.

d) Roles and Status

The position a person holds in society has an impact on them. If a person holds a high position, his decision will have a big impact on the purchasing decision. A corporation’s Chief Executive Officer will make purchases consistent with his position; however, a staff member or employee of the same organisation will make purchases differently.

For Example,

When a well-known fashion influencer wears a particular brand of sneakers and shares it on their social media platforms, their followers may be more inclined to buy that brand, believing it to be trendy or of high quality based on the influencer’s endorsement.

3. Personal Factors

The consumers’ own personal factors have an impact on their purchasing decisions. These personal factors differ from person to person, resulting in different opinions and consumer behaviours.

a) Age

Individuals’ purchasing decisions are influenced by the age group to which they belong. When compared to youngsters, elderly people’s purchasing behaviour would be completely different.

b) Income

The shopping habits of a person are influenced by their income. The purchasing power of customers increases with wealth. When a customer has more money on hand, they have the potential to spend more on expensive products. Whereas, consumers who fall into the low or middle-income bracket spend the majority of their income on necessities like food and clothing.

c) Occupation

A consumer’s occupation affects his or her purchasing behaviours. A person prefers buying items that are related to his or her work. A senior corporate executive, for example, might purchase formal apparel, but a creative designer would choose casual clothing.

d) Lifestyle

A person’s attitude and manner of life define who they are in society. A consumer’s lifestyle has a significant impact on their buying behaviours. A person who lives a healthy lifestyle will spend more money on healthier food choices.

For Example,

Imagine a college student living away from home with a tight budget. Their personal factors—age, life stage, and financial situation—strongly influence their buying behavior. They might look for deals on groceries, prefer affordable fast food over expensive restaurants, and choose second-hand textbooks or digital versions to save money.

4. Psychological Factors

Understanding consumer behaviour relies heavily on human psychology. Psychological factors are difficult to measure, yet they are powerful enough to affect a purchasing choice.

Some of the most important psychological factors are:

a) Motivation

Motivation to do something frequently impacts a person’s purchasing behaviour. Individuals have several kinds of needs, including social, basic, and security requirements, as well as esteem and self-actualization needs. The fundamental requirements and security needs take priority over all other wants and these encourage a customer to purchase things and services.

b) Perception

Our perception is formed when we receive information about a product and analyse it in order to generate an appropriate image of that product. We build an image of a product whenever we see an advertisement, review, comment, or promotion. As a result, our perception influences our purchase decisions significantly.

c) Attitudes and Beliefs

Consumer attitudes and opinions also have an impact on purchasing decisions. The consumer acts in a specific way towards a product based on their mindset. Mindset is very important in developing a product’s brand image. Therefore, a marketer works hard to understand customer attitudes in order to build marketing initiatives.

For Example,

If someone is preparing for a marathon and believes that having the right equipment is crucial for success and injury prevention, they might be motivated to invest in a pair of running shoes from a brand that is endorsed by top athletes and marketed as being at the forefront of technology and design.

5. Economic Factors

The buying behavior of consumers greatly depend on the economic condition of the a country and a market. Counsumers of a prosperous nation with strong economy are more likely to have high purchasing power, as there is greater money supply in its market. However, the market of a weak economy struggles and affects employment and purchasing power of the people.

Some of the economic factors influencing consumer buying behaviour include:

a) Personal Income

This refers to the amount of money an individual earns. The two types of personal income that a consumer has are Disposable Income and Discretionary Income.

Disposable Income is the income that remains in the hands of an individual after paying all the necessary payments (including taxes). If the disposable income is more, then the consumer will spend more on purchase, and vice-versa.

Discretionary Income is the income that remains in the hands of an individual after paying for all the basic necessities of life. This income is used for purchasing durables, luxury products, shopping goods, etc. If this income increases, then the consumer will spend more on purchase, and vice-versa.

b) Family Income

It is the total income of all members of a family. When more members of a family are earning, then there is more money/income available to purchase basic need goods and luxury items. Therefore,

c) Income Expectations

An individual’s expectations with his expectations for future income level, greatly impacts his buying behavior. If the individual expects his income to increase in future, he will spend more of his money to purchase luxury goods, shopping goods, and durables, and vice-versa.

d) Consumer Credit

The credit facility given to the consumers affects their buying behavior. If they are given good credit terms and better EMI options, then the probability of them buying luxury goods, shopping goods, and durables is more.

e) Liquid Assets

These are the assets that individuals can quickly turn into cash. People with more illiquid assets are likely to spend more on durables, luxury goods, and shopping goods, and vice-versa. Some of the examples of liquid assets include cash in hand, securities, and bank savings.

f) Savings

It is the amount saved by an individual from his income. If an individual saves more from his income, then his expenditure on other items will reduce, and vice-versa.

For Example,

During tough economic times, like recession, people often have less money to spend. They might stop buying things they don’t really need or look for cheaper options. A family planning to buy a new car might wait until their financial situation improves. Instead, they will focus on essentials like food and bills.

Conclusion

In conclusion, understanding the five major factors influencing consumer buying behavior—psychological, social, cultural, personal, and economic—is essential for businesses aiming to connect with their target audience effectively.

This knowledge is crucial for marketers because it helps them to better communicate with customers. They can fill the market gap and identify the items that are required and the products that are no longer in use by knowing how customers choose a product.

Factors Influencing Consumer Buying Behavior – FAQs

Why is it important for businesses to understand consumer buying behavior?

Understanding consumer buying behavior is essential for businesses to develop effective marketing strategies, tailor products and services to meet consumer needs, and create positive customer experiences. By gaining insights into the factors that influence consumer behavior, businesses can enhance customer satisfaction, build brand loyalty, and drive sales growth.

How can businesses use insights into consumer buying behavior to their advantage?

By understanding consumer behavior, businesses can tailor their marketing efforts, product offerings, pricing strategies, and customer experiences to better meet the needs and preferences of their target audience, ultimately driving sales and fostering customer loyalty.

Can social factors influence consumer purchases?

Yes, social factors like family, friends, and social networks significantly impact consumer buying habits and choices.

What environmental and ethical considerations influence consumer buying behavior?

Environmental concerns and ethical considerations, including sustainability, corporate social responsibility, and ethical sourcing, influence consumer preferences for environmentally-friendly and socially-responsible products and brands.

Why are personal factors important in influencing buying behavior?

Personal factors are important because they reflect the individual characteristics of consumers, such as age, occupation, lifestyle, and economic situation, that help businesses tailor their products and marketing strategies to better suit the specific needs and wants of different consumer segments.