Debayan Ganguly (Dev Ayan) is an MBA with 2 years of experience in B2B sales. He likes to write and spread his learnings through blogs.
Marketing is all about Consumer Behaviour. The better you understand the consumer and how they behave, the better you can reach out to them with your products and services.
Consumer Behaviour, by definition, is the study of the ways consumers behave in a particular environment, the factors affecting their specific behavior, and the journey they go through before making any purchasing activity. This blog will discuss the five factors influencing consumer behavior and how they will change in the near future. The factors are both external and internal in nature. While social and cultural factors are purely external, psychological factors are strictly internal.
Culture, Subculture, and Social Class influence consumer behavior and, in hindsight, become pivotal in shaping many psychological and personal factors.
Culture and Subculture
Culture and Subculture are the defined ways in which a group of people have similar characteristics and behave similarly, have notions of morality, law, ethics, wants, needs, etc. Thus, culture shapes the way of thinking of a large spread of people.
Subcultures exist within these cultures and differ slightly from other subcultures while showing most of the similar identifying characteristics of the culture in which they belong. For example, a particular culture may have certain food habits they are comfortable with doing. Therefore, before entering any market, researching their culture is essential and saves many expenses before launching the product.
Social Class refers to the socio-economic conditions of the consumer in geography. There are primarily seven socio-economic groups viz.
- Upper Uppers
- Lower Uppers
- Upper Middle Class
- Middle Class
- Lower Middle Class
- Upper Lowers
- Lower Lowers
Based on which class they belong to, your consumer will behave differently. While Uppers may prefer exclusivity, high-end luxury products, indulgent services, the middle class may go for VFM products, while the lower classes may choose to economize their consumption. The Middle Class may consider over-spending in the coming years on health, comfort, and safety, exclusive to the Uppers. They will also resort to panic purchase and hoarding once there is an economic lockdown. The lower class in rural areas contribute to more volume sales of smaller SKUs at a cheaper rate. 4A model of rural marketing will benefit in selling to these classes.
Social Factors are a part of external factors influencing consumer behaviours. Family, Reference Groups, and Roles and Status of the individual make up the Social Factors.
Family plays a vital role in the basket size and the basket portfolio of the customer. After the days of the pandemic, people will prefer staying with families and choose products that can be consumed with the family. Bigger cars, family insurance, home and real estate may be critical areas that may see a rise in sales in the coming days.
Reference groups are the groups in which the consumer identifies. These can be friends, colleagues, neighbours. Often they have similar buying behaviour and influence each other in their decision making journey.
Roles and Status
A person's buying behaviour is determined by their position in society, their office, or amongst their groups. A person higher up the ladder may prefer buying products that separate him from the rest. Someone known for health and fitness may avoid buying any unsought goods to avoid misguiding his followers.
Age, Income, Occupation, and Lifestyle are the personal factors influencing consumer behavior. These are internal factors and are independent of external factors like Social, Cultural, or Economic Factors.
As the person ages from infancy to senility, in each stage, the preference for products change. For example, while children may prefer sweetened confectionaries and brighter clothes, older family members may like eating healthier and wearing subtle colored garments.
With the rise in disposable income, the amount of consumption increases too. Therefore, someone with a high income may prefer opting for more services than products. This direct proportionality helps marketers segment the consumer base based on their income and develop products for each income group.
Apart from the income level, the occupation the consumers do also impacts their consumer behavior. Someone with a sedentary job may prefer investing in healthy food, formal dresses, and laptops. In contrast, someone who needs to travel or do a lot of manual labor may pick weather-friendly clothes and sturdy devices and gadgets instead of fancy fragile ones.
Lifestyle refers to the way an individual decides to live their life in society. Based on the choice, they may choose to buy products that suit their way of life best. While some may choose to live their life to the fullest and invest in parties and indulgences, others who choose to have a peaceful life may spend more on perfecting their indoors.
The factors included under the Psychological Factors are Attitude, Perception, Motivation, and Learning.
Attitudes and Beliefs of the consumer towards your products will play a key role in your branding and will be a deciding factor in the success of your marketing campaigns. If the product doesn't fit well with their attitude, you will have a tough time converting those customers. The vaccination drive of 2021 showed us how anti-vaxxers created a problem in the vaccination process in many countries. They believed that they were being forced a vaccine, preventing them from accepting it and adopting it. You will need to work more on the awareness level to jump the attitude barriers.
Humans are biased creatures, and unbeknownst to us, our bias plays a part in every decision we make. The same happens when a consumer is making a purchase or going through the decision-making process of purchasing. Thus Perception becomes an essential consideration while studying consumer behavior. Perception is the way a customer accumulates and assimilates information and makes their impression. The way you work to create awareness for your product may have a different impact on your customers depending on their perception.
The level of motivation makes or breaks the sales. Their needs could trigger motivation. These needs could be at any level on Maslow's Hierarchy. When you are curating your product or content, try identifying the need to better understand their level of motivation.
In the coming days, people will be more concerned about buying health-related products like Medications, Health check-ups, Insurances, etc. So trying associating your products (if you can) with the health sector products as the motivation to purchase will increase many folds.
After your consumer has used your product or related products, the user experience leaves them with an impression about your product that ensures whether they will repurchase or not, whether they will promote it through word-of-mouth or not.
There are other ways to learn about your products, maybe through advertisements, organically through searches, and many different courses. There has to be great content both online and offline to aid in the learning process of your consumers.
Businesses going digital implementing AI and AR technologies need to focus on consumer education.
Economic Factors playing a significant role in shaping consumer behavior are Personal Income, Family Income, Income Expectations, Savings, Liquid Assets, and Consumer Credit.
Apart from an individual's personal income, their family income also plays a vital role in the kinds of products and services they consume, and the decision-making journey one passes through before purchasing them. Now that the pandemic has forced people to stay indoors with their families, they are more likely to think about their family as a whole, the notions of individualism may get diluted. So family income could also be a basis of segmentation.
If your consumer expects an increase in income, they are more likely to upgrade their lifestyle and spend on luxury items and services. On the other hand, they will cut down on their expenses and lifestyle if there's a chance of a decrease in future income.
The decision to save more for a future expense or emergency may lead your customers to cut down on their current costs and opt for more value for money services. If they had to undertake an emergency expenditure, they would be conservative in their expenses until they can regain their financial footing on their savings.
The more assets an individual has in their bank, shares, and other easily liquefiable assets, the more will be the expenditure on luxuries and comforts.
With more credit given to the customers, the purchase intent rises. The offers like no-cost EMIs, accessible credits and paying-later options encourage consumers to benefit from interests while allowing them to enjoy the product now.
Other economic factors like Inflation, Business Cycle, Interest Rates, etc., also affect consumer buying behavior as they influence the demand and supply in the market on macro levels.
- COVID-19: Impact on Consumer Behavior Trends | Accenture
Accenture reports the impact of coronavirus (COVID-19) on consumer behavior and how it will transform the future of the consumer goods industry. Read more.
- What are the 5 Factors Influencing Consumer Behavior? - Clootrack
5 Common Factors Influencing Consumer Behavior. A marketer should try to understand the factors that influence consumer behavior.
Watch my Video on Consumer Behavior
- FACTORS INFLUENCING CONSUMER BEHAVIOR | MARKETING LESSON | MBA TALKS - YouTube
In this video, I talk about an important concept in Marketing - Consumer Behavior and the Factors Influencing them.Do check out my blog on the same topic: ht...
This content is accurate and true to the best of the author’s knowledge and is not meant to substitute for formal and individualized advice from a qualified professional.
© 2021 Debayan Ganguly