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5 Common Factors Influencing Consumer Behavior

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5 Common Factors Influencing Consumer Behavior

Consumer behavior can be broadly classified as the decisions and actions that influence the purchasing
behavior of a consumer. What drives consumers to choose a particular product with respect to others is
a question which is often analyzed and studied by marketers. Most of the selection process involved in
purchasing is based on emotions and reasoning.

The study of consumer behavior not only helps to understand the past but even predict the future. The
below underlined factors pertaining to the tendencies, attitude and priorities of people must be given
due importance to have a fairly good understanding of the purchasing patterns of consumers

5. Marketing Campaigns

Advertisement plays a greater role in influencing the purchasing decisions made by consumers. They are
even known to bring about a great shift in market shares of competitive industries by influencing the
purchasing decisions of consumers. The Marketing campaigns done on regular basis can influence the
consumer purchasing decision to such an extent that they may opt for one brand over another or
indulge in indulgent or frivolous shopping. Marketing campaigns if undertaken at regular intervals even
help to remind consumers to shop for not so exciting products such as health products or insurance
policies.

4. Economic Conditions
Consumer spending decisions are known to be greatly influenced by the economic situation prevailing in
the market. This holds true especially for purchases made of vehicles, houses and other household
appliances. A positive economic environment is known to make consumers more confident and willing
to indulge in purchases irrespective of their personal financial liabilities.

3. Personal Preferences

At the personal level, consumer behavior is influenced by various shades of likes, dislikes, priorities,
morals and values. In certain dynamic industries such as fashion, food and personal care, the personal
view and opinion of the consumer pertaining to style and fun can become the dominant influencing
factor. Though advertisement can help in influencing these factors to some extent, the personal
consumer likes and dislikes exert greater influence on the end purchase made by a consumer.

2. Group Influence

Group influence is also seen to affect the decisions made by a consumer. The primary influential group
consisting of family members, classmates, immediate relatives and the secondary influential group
consisting of neighbors and acquaintances are seen have greater influence on the purchasing decisions
of a consumer. Say for instance, the mass liking for fast food over home cooked food or the craze for the
SUV’s against small utility vehicle are glaring examples of the same.

1. Purchasing Power

Purchasing power of a consumer plays an important role in influencing the consumer behavior. The
consumers generally analyze their purchasing capacity before making a decision to buy and products or
services. The product may be excellent, but if it fails to meet the buyers purchasing ability, it will have
high impact on it its sales. Segmenting consumers based on their buying capacity would help in
determining eligible consumers to achieve better results.

Understanding, analyzing and keeping track of consumer behavior is very critical for a marketing
department to retain their position successfully in the market place. There are various other factors too
that influence consumer behavior apart from the four listed above.
http://www.iresearchservices.com/5-common-factors-influencing-consumer-behavior/

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Althought the amount of literature is particularly large, nearly all previous studies that have addressed
the factors affect the spending behaviour of the public at large instead of focusing on students at
particular.

According to social learning theory, spending behaviour can be viewed as a learned behaviour often
transmitted by parents and other influential indiviudals, and is, therefore, predominantly, one that is
passed from generation to generation. Spending behaviour and their patterns have been conceived as
existing along a continuum running between two poles. One pole represents the " holding on"
behaviours or a preoccupation with the acquisition and hoarding of money; the other pole, the
obsessive spending behaviour ( Lois carrier, CFP ; David Maurice, CFP, 1998 )

Obsessive spending behaviour is called compulsive spending. Compulsive spending, like substance abuse
and pathological gambling, places a burden upon individuals, families and society. Compulsive spending
is dissimilar, however, in that this behaviour, centered around the use of money, is an activity which is
both required and condoned in our culture. Compulsive spending is a behaviour manifested by a loss of
self control of chronic overspending(John B. Harrison, 1996). The act of buying makes them feel
important, attractive, fulfilled. Therefore, it shows that compulsive buyers will spend a lot in order to
make them feel happier. Compulsive spending is something people suffer from unknowingly. It is an
addiction that rarely gets attention because few recognize the pattern in these psychological terms with
its many facets( Lois carrier, CFP ; David Maurice, CFP, 1998 ).

Hoarders in other words can be called as under spender, which is the contrast of obsessive spenders.
Under-spenders represent the most extreame condition of hoarding. They hoard , but also fiercely
resiste spending, even to their detriment( Lois carrier, CFP ; David Maurice, CFP, 1998 ). Lower-status
person is profoundly different in his mode of thinking and his way of handling the world from the Middle
Class individual. Where he buys and what he buys will differ not only be economics but in symbolic value
( Pierre Martineau, 1958).

There are two types of spending behaviour, which include planned spending behaviour and the other
one is unplanned spending behaviour. Planned spending behaviour is that consumers use a system of
mental budgeting in which they allocate money to different mental accounts and try to resist further
spending in that category after the budget is depleted (Klaus Wertenbroch & Ziv Carmon, 1997). To help
themselves stay within overall spending limits, consumers use mental budgets to facilitate rational trade
offs between competing funds as a self control device (Klaus Wertenbroch & Ziv Carmon, 1997).

The other type of is unplanned spending behaviour, which means that the shopper anticipates the
occurrence of unplanned purchases in his or her overall spending expectation for at least two major
reasongs. First, the routine nature of grocery shopping means that a shopper is aware that in store
stimuli will trigger forgotten needs ( Bettman 1979; Lynch and Scrull 1982). Secondly, they will have new
ideas while in the store.

In a study by Schreiber as cited in Karki (2000), five critiria are listed that must be taken into
consideration when studying consumer buying behaviour: 1) price consciousness 2) quality
consciousness, 3) original, unusual decision, 4) planned decision and 5) non conformist decision.

2.1Cultural factors

2.1.1 Culture

Basically, culture is the part of every society and is the important cause of person wants and 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. ( Asifo Shah, 2010)

Culture represents the behavior, beliefs and, in many cases, the way we act learned by interacting or
observing other members of society. In this way much of what we do is shared behavior, passed along
from one member of society to another. (Chitpan Kanhasiri, 2006)

Due to different culture context, different people will be differ with one another in their attitudes
towards brands, money, and other costs of time ansd stress. The difference will affect one another in
the willingness to purchase of the two groups. ( Sarah Maxwell, 2001)
2.1.2 Subculture

Each culture contains different subcultures such as religions, nationalities, geographic regions, racial
groups etc. Marketers can use these groups by segmenting the market into various small portions. For
example marketers can design products according to the needs of a particular geographic group. ( Asifo
Shah, 2010)

In addition, subculture influences coming from religion, racial groups or nationalities each have an
impact on the consumer as will their socio-economic class. (Ylva Jansson, 2010)

Sub-cultures also have shared values but this occurs within a smaller groups. For instance, sub-cultures
exist where groups share similar values in terms of ethnicity, religious beliefs, geographic location,
special interests and many others. (Chitpan Kanhasiri, 2006)

Each culture consists of smaller subcultures that include nationality, religion, and geographic regions.
The subculture often reinforces the values instilled by the culture at large. For instance, children are
taught in the culture, either deliberately or covertly, that youthfulness is a higher value than old age.
When they enter their subculture (in this case their general neighborhood) and compare their quality of
life to the quality of life in the local nursing home, the value of youthfulness is reinforced. This is a
general example; I am not using it to make a statement of any kind against nursing homes. I am only
making the point that Americans clearly value youthfulness. When subcultures gain power and wealth,
companies customize marketing messages and campaigns to serve them. This is known as diversity
marketing, and has proven to be an effective marketing strategy. Think about the consequences of a
group of consumers who feel ignored by your message. They may fit your definition of a dream client,
but if your campaign ignores the subculture they identify themselves with, the message will fall on deaf
ears. ( Bill Tamminga, 2009)

2.1.3 Social Class

Every society possesses some form of social class which is important to the marketers because the
buying behavior of people in a given social class is similar. In this way marketing activities could be
tailored according to different social classes. Here we should note that social class is not only
determined by income but there are various other factors as well such as: wealth, education, occupation
etc. ( Asifo Shah, 2010)
In the theory of marketing and buyer behavior, the concept of social class is considered the basic
determinant of consumption behavior. In fact, among behavioral scientists, there was a consensus that
market behavior of individuals is closely related to their social class. In this context, social class was
often considered more important than income in affecting buying behavior (Mirela Mihic; Gordana
Culina, 2006 ).

When looking at numerous theoretical disputes and postulates (from the early to the contemporary
ones), one might argue that the social class concept is more complete and comprehensive than the
notion of income when considering their relevance in understanding and explaining consumption and
buyer behavior. The reasoning behind this varies. Although social class is often associated with higher
income, income still presents only one of many characteristics of social class. Individuals or families of
different social classes can dispose of similar income, i.e. those in the bottom or top income group
should not all be in the bottom or top social class group. Furthermore, income grows higher as we grow
older, which has no bearing to social class changes. Also, families with one or more working members
and subsequently a higher income are not automatically members of a higher social class. Much more so
than income, social class is associated with values and life-styles of consumers, both of which
significantly determine the consumption structure and behavior for numerous products. Finally, families
in each social class can, depending on their income level, be divided into three subgroups: over-
privileged, average and underprivileged. Note that the over-privileged and underprivileged families,
despite the considerable difference in their purchasing power, retain the buying habits and the behavior
of the segment they belong to. Despite everything that is said above, it would be irrational and wrong to
deny the influence that income has over buying behavior, both on type and prices of products
purchased. (Mirela Mihic; Gordana Culina, 2006 ).

2.2 Social Factors

2.2.1 Reference Groups

Reference groups have potential in forming a person attitude or behavior. The impact of reference
groups have potential in forming a person attitude or behaviour. The impact of reference groups varies
across products and brands. For example if the product is visible such as dress, shoes, car and so one
then the influence of reference groups will be high. Reference groups also include opinion leader ( a
person who influences other because of his special skill, knowledge or other characteristics) ( Asifo Shah,
2010)
Individual identifies with the group to the extent that he takes on many of the values, attitudes or
behaviors of the group members, Families, friends, societies, civic and professional organizations.
Affinity marketing is focused on the desires of consumers that belong to reference groups. Marketers
get the groups to approve the product and communicate that approval to its members.The degree to
which a reference group will affect a purchase decision depends on an individual's susceptibility to
reference group influence and the strength of his/her involvement with the group. (Chitpan Kanhasiri,
2006)

2.2.2 Family

Buyer behavior is strongly influenced by the member of a family. Therefore, marketers are trying to find
the roles and influence of the husband, wife and children. If the buying decision of a

particular product is influenced by wife then the marketers will try to target the women in their

advertisement. Here we should note that buyng roles change with change in consumer lifestyles.

( Asifo Shah, 2010)

Families go through stages; each stage creates different consumer demands: Because income families
are becoming more common, the decision maker within the family unit is changing. (Chitpan Kanhasiri,
2006)

The family has been identified as one of the most influential environmental factors affecting food- and
nutrition-related decisions and behaviour, operating at the levels of parent modelling and parent-child
interactions. Recent changes in American family structure, intra familial decision-making, and women's
work patterns have had a profound influence on the growing economic power, control, and
independence of children and teenage youth, with the result that they now exert a stronger influence
on family decision-making than their cohorts did in previous years. (Vivica Kraak, David L. Pelletier,
1998). Most probably, students will be easily influenced by parents.
Students, like all people, learn their financial behaviour early in life. Family experiences in particular
often provide the foundation for the student's financial behaviour. Parental attitudes not only directly
affect the attitudes of the children about financial leaning, but also negatively impact the parents;
financial behaviour with the children, Parents who provide buying activities for children aid their
children's financial learning. And finally, for a sample of professional and managerial families there was a
tendency for childhood experiences to affect financial behaviour into early adulthood. (Bryan Gayle
Miller, 2001)

2.3 Psychological factor

Personal psychological factors, such as self esteem, have been found to play a role in the way an
individual perceives and acts in his or her world ( Lowenstein, 1994). There are two type of psychology,
one type is classified as psychological pleasure and the other type is called as psychological cost, is those
things that a person dislikes. ( Sony Britt, John E. Grable, Brina S. Nelson Goff and Mark White, 2009)

2.3.1 Brand name

Brand name has a significant effect on buyers' percceived quality, value and willingness to purchase.

Brand loyalty is the uniqueness may derive form greatest trust in the reliability of a brand or from more
favourable effect when the customer use the brand. Similarly, brand loyalty leads to a greater market
share when the same brand is repeatedly purchased by loyal customer. It is shown that there is a
relationship among the brand trust, brand effect and brand performance outcomes with an emphasis on
understanding the linking role played by brand loyalty. ( Arjun Chaudhuri & Morris B. Hodbrook, 2001)
Therefore, the company will study the spending behaviour of the customer by looking at their loyalty of
the brand.

To have brand loyalty, we need to have brand equity. Brand equity is of primary importance in
establising future sales. It suggests that a firm must meet customers' expectations, which can
considered an objective assessment of the utility of the firm's products and services. Therefore, it is
important that managers uncover the level of influence of various aspects of calue on future sales for
different customer segments in their business so that resources can be appropriately allocated, thus
maximizing value equity. ( Vogel,Evanschitzky& Ramaseshan, 2008)
A study had revealed that students from different faculties will have different brand sensitivity among
one another. For example, students from the school of communications were found to have
signigincatly less brand sensitivity than students in other departments. Students in the School of
Engineering and Design are interested in purchasing fashion product. Students in other departments say
that they are only somewhat interested in purchasing fashion products. ( A.Nur Ersun & Figen Yildigim,
2010)

2.3.3. Role models

Role models are regarded as a potential group of people that are able to leave impact on the
consumption intentions and behaviors of individuals. Role models can directly from parents, peers,
relatives and celebrities. It seems that parents and celebrites play an important role in influencing young
adults spending behaviour. ( Ernest Cyril de Run, Mohsin Butt & Chung Yen Nee, 2010).

Parent act as primary source to convey belief and reinforce behavior of their child.. Spending behavior is
one of the most important susbet of a child's learning under his parents supervision. Past studies have
affirmed that the experience and attribute gained from parents in childhood reflect later shopping
preferences.

Yet, due to diminishing role of parent's supervision due to rapid economic growth and migration to
urban area of the country, that may possibly increase the influence of celebrities. ( Ernest Cyril de Run,
Mohsin Butt & Chung Yen Nee, 2010).

Celebrities are individuals who achieve a certain degree of fame across or among a section of a society.
Some individuals tend to follow the footsteps fo celebrities to accommodate characteristic that they are
lacking in their life. (Ernest Cyril de Run, Mohsin Butt & Chung Yen Nee, 2010). Because of that, they may
be influenced by their celebrities in relation with spending behavior. Past researchers have shown that
athlete role models are able to influence young generation's behavioral intentions, especially positive
word-of-mouth regarding the product enclosed by them.( Bush and Martin, 2000)

In most companies, they will try to understand the psychological side effects because they have a
number of important implications for financial services. First, there is the benefit of increased
understanding of customer behaviour, which should allow greater accuracy in modelling and prediction
of spending patterns across different customer groups. This knowledge would assist in planning, pricing
and the targetung of product offerings. ( Grag, 2001).

2.4 Personal factor

2.4.1 Lifestyle

Lifestyle refers to one's mode of living, activities and opinions regarding oneself and the environment in
general. It covers issues such as how one lives, what products one buys, how one uses them and one's
opinion about them. A person's lifestyle is molded by one's demographic characteristics and values.

Lifestyle is a leisure activities in which individual participate. The activities may be classified as people
oriented, cultural, self improvement, community or entertainement. In regard with the number of
money spent on shopping by consumer, ratailers track that different shopper groups spend different
amounts of money based in demographic and lifestyle charateristic. It is stated that lifestyle will have an
impact on the partronage behaviour of customers in the retail market. ( Anna Ashlock Magie, 2008)

Past researcher has found out that there is a significant and positive relationship between life style and
spending behaviour. They will choose to buy the product which meets their interest in terms of products
and price. ( Yasmin Hassan, 2010)

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