CONSUMER BEHAVIOR

Consumer Behavior
Consumer behaviour is a field of study that examines the
decision-making processes and activities undertaken by
individuals, groups, or organisations in relation to the
acquisition, utilisation, and disposal of products, services,
experiences, or ideas within the marketplace. The process
entails comprehending the diverse elements that impact
consumers' decision making and actions, encompassing
psychological drivers as well as external aspects such as
cultural and social standards.
Consumer Behavior- Definition

It is broadly the study of individuals, or organizations and the processes

consumers use to search, select, use and dispose of products, services,
experience, or ideas to satisfy needs and study of its impact on the consumer
and society
Factors affecting consumer behavior
Consumer behavior is shaped by
various factors that influence purchasing
decisions. These factors, from personal
preferences to external social and
cultural elements, play a critical role in
determining how consumers select, buy,
and use products or services.
Understanding them is essential to
developing effective marketing
strategies. Let's understand each factor
in detail.
Psychological Factors
Psychological factors delve deep
into how a consumer’s mind works,
influencing their buying decisions

Understanding consumer behaviour

relies heavily on human psychology.
Psychological factors are difficult to
measure, yet they are powerful
enough to affect a purchasing
choice.
Psychological Factors
Motivation: The inner drive compels a consumer to fulfil a need. For example, someone might buy a
luxury car not just for transportation but to fulfil a deeper need for status or self-esteem.

Learning: It involves acquiring knowledge through experience and outside sources. For instance, a
customer might buy a certain detergent brand because experience has shown it works best for them.

Attitudes & Beliefs: These are formed over time from various sources, including experience and external
influences. A person might choose eco-friendly products because they believe in environmental
conservation.

Perception: How a consumer interprets and makes sense of available information. For example, two
customers might see an advertisement: one perceives it as informative, while another finds it
manipulative.

Example:Nike’s “Just Do It” campaign

Cultural Factors

Personal factors are individual-centric and

vary widely from one person to another.
Age dictates life-cycle needs, with younger
individuals prioritizing different products
than older individuals. Occupation and
lifestyle heavily influence daily needs; a
tech professional might prioritize the latest
gadgets, while a farmer might value
agricultural tools.
Cultural Factors
Culture: The values, perceptions, and beliefs society instils can influence consumer decisions. In some
cultures, for example, gold jewellery is bought extensively as it symbolizes wealth and status.

Subculture: Groups within a culture have shared beliefs and values. For instance, the younger generation
might be more inclined toward online shopping than the older generation.

Social Class: Different classes have different preferences. Luxury brands often target the upper class,
while discount stores might target the middle or lower class.

For example:
Brand: Coca-Cola’s “Share a Coke” campaign were bottles were personalized with common names,
tapped into cultural and subcultural identities
Social Factors
Social Factors
Social factors emphasize society's influence on
individual consumers. The family often plays a
pivotal role, with members having a say in collective
decisions. Reference groups, which could range
from close friends to celebrities, often serve as
benchmarks or influencers, guiding buying choices.
 Social Factors
Family: Family members can influence purchasing decisions. For instance, parents might buy a car based
on its safety record, thinking of their children.

Reference Groups: These are groups that a person looks to for validation or approval. If a celebrity, seen
as a reference, endorses a product, their fans might be more inclined to buy it.

Roles & Status: Depending on one’s role in society (e.g., parent, manager, student), one might make
certain purchasing decisions. A manager might buy formal clothes to maintain their professional status.

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.

For example:Apple products are not just gadgets but status symbols
Personal Factors
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.
Personal Factors
Age: As people grow, their tastes and preferences change. Teenagers might spend on gadgets, while older people might
invest in health products.

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.

Occupation & Lifestyle: A corporate executive might buy formal attire and a luxury car, while an artist might prefer
bohemian clothing and a vintage car.

Personality: Some people prefer flashy items because of their extroverted nature, while introverts might choose more subtly.

Brand: L’Oréalfamous tagline, “Because You’re Worth It,” speaks directly to individual self-worth and esteem.
Economic factors
Economic factors revolve around the financial
aspects that influence buying decisions. Personal
income dictates disposable income levels,
thereby determining purchasing power. A
country's broader economic situation, whether
booming or in recession, influences consumer
confidence and spending patterns.

Liquid assets, or readily accessible funds, can

also sway decisions; those with ample liquid
assets might be more open to impulsive or luxury
purchases than those with tighter financial
constraints.
Economic factors
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.
 Economic factors
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.

Brand:Walmart’s promise is clear: everyday low prices