Factors Determining Consumer Buying Decisions
Economic, demographic, psychological and socio-cultural factors determine consumer buying decisions. These factors directly affect consumer behavior.
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| Factors determining Consumer Buying Decision |
I. Economic Factors
Economic factors play an important role in consumer buying behavior decision. It also directly affects purchasing power of the consumers. If consumers’ purchasing power is weak, they cannot make decision to buy goods or services even if they like very much. But, if they have purchasing power, they can take prompt decision to buy goods or services they like. Income level, income of their family members, liquid asset, spending attitude, credit facility etc. are the economic factors to determine consumers’ buying decision.
- Consumer’s income level: Income of all consumers’ cannot be same. Some have more and others have low income level. If the income of consumers is high, purchasing power and readiness become high, otherwise their purchasing power and readiness become low. The consumers having high level income take quick decision to buy high quality goods or services. But those having low income take slow decision to buy low quality goods or services.
- Income of other members of family: Consumer lives in family. Family expense is managed by adding the income of all members of the family. Any change in income of other members also affects the purchasing decision of the consumer. If income of the other family members increases, purchasing power also increases; if decreases, it also decreases. In the countries like Nepal where joint families live together, income of other family members also should be studied and analyzed while analyzing the economic determining factors.
- Liquid assets: If the consumers have liquid assets such bank balance, gold, silver, share, government bond etc., their purchasing power does not drop off even if incomes become irregular or drop down, because such liquid assets increase their purchasing power.
- Attitude towards spending: Consumers’ spending attitude becomes different. Some consumers form positive and others form negative attitude towards expense. Such attitude also influences buying decision.
- Credit facility: Credit facility also influences consumers’ purchasing power and readiness. If credit facility is available, consumers’ spending level increases. Just the opposite, if no credit facility is available, consumers’ spending level decreases.
II. Demographic Factors
Demographic factors play an important role in purchasing decision of the consumers. It directly or indirectly influences the consumers’ buying decision. The demographic factors include family size, family life cycle, occupation, age, sex or gender etc.
a) Family size and life cycle: Family size of all consumers may not be same. Size of some family may be small and others may be big. The size of family influences selection of goods and buying quantity. If the family size is big, such consumers, generally, purchase large quantity of same brand. If family size is small, they purchase small quantity of goods of different brands.
Life cycle of a family also influences consumers’ buying behavior. Unmarried, married but have no children, married and have children, old and other consumers have their own behaviors towards selecting and buying goods. Behaviors of consumers are different. Such behaviors also directly influence buying decision.
b) Occupation: Occupation of the consumers also influences their buying behavior. For example, workers buy cheap clothes to wear while working in factory. Teachers, professors, advocates, managers etc. buy costly dresses to wear while working in their offices. So, the occupation affects buying behavior of the consumers.
c) Sex or Gender: Buying behavior and decision also differs between men and women. Women buyers give importance to price, quality and warranty of goods and evaluate alternatives. They take longer time and make efforts for making buying decision. But males give comparatively less importance to price, quality and warranty of the goods. They are influenced by advertisements, sale promotion and other activities. They do not take long time and efforts to take buying decision. They take buying decision promptly. They also do not base on evaluation of alternatives as many as the women base on.
III. Psychological Factors
Psychological factors also play important role in buying behavior of consumers. Consumer’s psychology becomes more self-centered. These factors include learning, motivation, perception, personality, attitudes, life style etc.
a) Learning: The changes that come in consumers from observation, experiment and experience is called learning. Consumers take buying decision after learning. Without learning and knowing anything about goods, they cannot take buying decision. Learning affects human behavior directly. Learning involves four factors such as curiosity, cue, response and reinforcement. Learning has two main theories. They are:
- Stimulus response theory: This is called S-R theory. Consumers express response as a result of stimulus. For example; consumers can be simulated by advertisement and they buy goods or services as response to the advertisement.
- Modern theory: This theory includes drive, cue, response and reinforcement. Drive stimulates consumers to buy goods or services, cue gives information how the consumers respond. If the response is positive, its enforce takes place, otherwise it does not.
b) Motivation: Motivation is the power sprung from the heart of a man. It leads towards objective. Until the man does not achieve objective, he becomes restless. So, whatever activities a man does, they are all the results of motivation.
Motivation also affects buying behavior of consumers. Motivation brings purposeful changes in human behavior. Motivated consumer becomes heartily ready to buy goods or services. There are many theories of motivation. Among them Maslow’s Hierarchy of Need Theory and Herzberg’s Two-Factor Theory have been discussed as follows:
i) Maslow’s Hierarchy of Need Theory
Abraham Maslow’s hierarchy of need theory believes that human being acts like motivated by need and need has a certain hierarchy. These needs are fulfilled one after another setting them in hierarchy. But men cannot be motivated by satisfied needs, only unsatisfied need affects human behavior. Abraham Maslow’s hierarchy of need theory can be presented as follows:
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Maslow's Hierarchy of Need Theory
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- Physiological needs: Physiological needs of human being are compulsory nature. Food, shelter, clothes, thrust, hunger etc. are physiological needs.
- Safety needs: When human’s physiological needs are fulfilled, security needs are realized. Security from physical danger, bad health, weak economic condition etc. are included in safety needs.
- Social needs: After the security needs have been fulfilled, human begins realize social needs. Friendly behavior, socially acceptable, living with love, involvement in social organizations etc. are included in social needs.
- Ego or esteem needs: After the human’s physiological, safety and social needs are fulfilled, she/he begins to realize ego or esteem needs. Under this, self respect, dignity, honor, freedom, praise, recognition of freedom etc. are included.
- Self actualization needs: According to Maslow, after the ego or esteem needs are fulfilled, human realizes self-actualization needs. This includes use of special skill, ability, creativeness, self-development etc.
Related Topic:
ii) Herzberg’s two-factor theory
Herzberg’s two-factor theory is based on hygiene and motivation factors. According to him, hygiene factor does not motivate human to work, it prevents dissatisfaction only, and motivating factors lead human towards works and increases satisfaction. According to this theory, the lower level needs are classified by Maslow as physiological needs, safety needs and social need and higher level needs as ego or esteem needs that come under hygiene factors and self actualization needs come under motivating factors. The following figure makes it clearer:
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| Comparison between Maslow's and Hertzberg's Need Theories |
c) Perception: The process of understanding about anything and making out its meaning is called perception. In other word, knowledge or understanding meaning or making out view about anything or any situation is called perception. Different persons may have different perception about same thing. Consumers collect information by looking, feeling, hearing, smelling, tasting etc. and make a certain perception. Accordingly the consumers make buying decision.
d) Personality: Consumers’ personality also influences buying behavior. Living style, talking style, interest, wants, personal style etc. as a whole, is personality. Personality is expressed in the form of self control and self confidence. Personality is expressed through dress, speaking style, his vehicle, his house, words he uses, restaurant he goes etc. The characteristics of personality are as follows:
- Self-confidence or dependency
- Aggressive or friendly
- Introvert or extrovert
- Traditional or dynamic
e) Attitude: Consumer’s knowledge, perception and belief about goods or services is called attitude.
Attitude of any person towards goods is not set by birth. Attitude is formed through learning and perception. What a consumer learns from society forms persons’ attitude. Such attitude makes the person decide to buy or not to buy goods.
Consumer’s attitude towards goods many be positive or negative. If it is positive, business organization tries to maintain it; if negative, the organization should adjust marketing mix and make it positive, because if the attitude becomes positive consumer decides to buy goods, otherwise decides not to buy. Attitude includes the following factors:-
- Learning: Attitude develops through learning process. For example, consumer learns something about goods through direct experience, information collection, mass communication media etc. As a result, his/her attitude develops.
- Consistency: Attitude becomes comparatively consistent but it becomes temporary. Attitude changes after a long time. As situation also affects attitude, it may change even in shorter time.
- Favorable or unfavorable: Consumers’ attitude towards goods or services becomes either positive or negative. It never remains neutral.
f) Life style: Living, wearing, eating, spending and other behaviors of men as a whole is called lifestyle. Life style of the person can be understood from different activities, interest, ideas and thinking style. They should be studied and analyzed to find out how the consumers spend time, what is their interest and how is their thought. Consumers’ life style makes difference in their need of goods and choice of brand. Consumers’ life style is influenced by their education, society, context etc. Lifestyle gives preference to the following three aspects of consumers:-
- Activities: Activity aspect includes how the consumers pass their time, what works they do, what their interest is, how they buy and how they pass holidays etc.
- Interest: Consumers’ interests about home, family, food, job, fashion etc. are included under this aspect.
- Opinion: Consumers’ thought, ideas and attitude towards society, politics, business, goods, services etc. are included in this aspect.
IV. Socio-cultural Factors
Social and cultural factors also play an important role in consumers’ buying behavior. The collective form of persons is called society, and their custom, tradition, wearing and eating, festivals, values and norms, religion, etc. on the whole is called culture. Social and cultural factors include family, reference group, social group etc.
a) Family: If the persons having same blood relations, married to others or adopted persons live in same home, they all are a family. A family includes father, mother, wife, children (sons and daughters), uncle and aunts, nephew etc. Family may be in joint or nuclear form. Different members of a family may play different roles. This influences buying decision. Generally the following roles are found in a family:-
- Initiator: The person who first presents suggestion or proposes to buy any goods is called initiator.
- Influencer: The person who influences buying decision is called influencer. Influencer plays an important role in buying decision.
- Decider: The person who takes last decision about what to buy, how to buy, where to buy and when to buy is called decider.
- User: The person who uses goods or services is called user.
The above mentioned roles may change in a family. The roles of each member of a family become different depending upon the nature of goods or services. For instance, all the members cannot have equal role in buying daily necessities for home, buying dolls, buying land or house, or buying expensive ornaments etc. Roles are found changing according to the nature of goods or services.
b) Social Class: High, middle and low class people live in society. Consumers’ class can be identified from their economic condition, life style, profession/occupation, education, premises, norms and values, belief, attitudes etc. The consumers who have high economic condition, prosperous psychology and customized life style are called or counted as high class. In the same way, middle class and lower class consumers can be identified.
The bases to distinguish social class are:
- Economic condition
- Life style
- Values, beliefs and attitudes
- Occupation/ profession
- Education
Buying behavior becomes different according to social class. High social class selects high quality, prestigious sophisticated and famous brand of goods. Low social class people select low quality goods and middle class people middle class quality goods. High class people visit foreign countries in holidays, celebrate Good Friday, birthday party. But low and middle class people cannot, due to lack of money even if they want.
c) Culture: Language, religion, belief, food, dress etc. on the whole is called culture. Culture is the behavior learnt from generation to generation. It influences activities of all the people. It naturally influences buying behavior. Men learn different things from culture, which leaves deep and indelible impression. It becomes very difficult to change culture along with the time. Culture may be seen or unseen. Home, food, living style, dress, behavior, working style etc. are seen culture where as language, religion, belief, attitude etc. are unseen culture. Although culture also may change after a long time. Different societies have different cultures which direct the people of their own society. Culture forms deep seated tradition and behavior which cannot be broken easily.
d) Subculture: The community adopting same culture can be classified in different ways on the basis of region, language, caste, religion etc. The culture classified in this way is called sub-culture. For example, Nepal’s culture can be classified into two subcultures as western culture and eastern culture on the basis of region. Similarly, culture can be classified into subcultures on the basis of caste, race like Gurung, Magar, Newar, Brahmin, Kshetri etc. In the same way, it can be classified into other subcultures on other bases. Culture influences consumers’ behavior. As special introduction and identity of consumers’ can be learnt from the study of culture, it helps to make marketing mix more effective.
e) Reference group: The group which influences consumers’ buying behavior is called reference group. Each consumer is associated with one or the other society and is directly influenced by the same. The group influences consumers’ buying behavior by providing information, influencing person’s attitude, giving pressure due to which they decide to buy goods or services. Generally, reference groups are as follows:
- Membership group: This includes family, religious group, professional group, trade union, etc.
- Aspiration group: The group interested to be member of any desired group is called aspiration group. For instance, political group, social or religious group, sport group, other extra activity group etc.
- Disassociate group: The group which breaks up from one and joins any other group is called disassociation. For example, if any political leader renounces politics and starts religious, social or other activities, it is called dissociation.
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