Factors influencing consumer behavior

A marketer can influence buyer behavior, but cannot control it. While it is difficult to predict the exact response due to complexities and variables within each factor, studying consumer behavior can help a brand effectively communicate with its intended audience.

To study consumer behaviour is to understand the decision-making process used by consumers to select and purchase products and/or services. By assessing the influence of certain factors in such processes, it is possible to market a product specifically to a set of consumers.

In order to cater to the global market, companies need to keep in mind four basic factors that influence consumer behaviour:

· Cultural

· Social

· Psychological

· Economic

Cultural

Culture is shared by members of a community, and involves their traditions, customs, values, food, languages, beliefs, etc. It is further divided into subcultures (nationality, religion, race, geographical areas)that are a market segment of their own. Naturally, they influence the behaviour of its members, and is the fundamental determinant of a customer’s wants and needs.

Cultural factors are a great way to determine whether or not the beliefs and values held by a particular group make them desirable to market to.

Learning about the target market’s cultural properties while analyzing consumers can help with marketing and product positioning, as cultural factors can help predict preferences of style and quality of the things consumers own and buy. To communicate effectively with their audiences, marketers must use appropriate symbols (verbal/non-verbal) to convey desired product images or characteristics.

Social

· Family: One’s family plays a major role in defining their personality, beliefs, etc. This gives shape to their choices and preferences. As one’s family includes people they see on a daily basis, it is more likely that a family together discusses which products and services must be purchased, e.g., cars, refrigerators, etc. A person’s role in the family also has a big impact on his purchases. For example, a bachelor is more likely to spend on himself, while a married man is likely to spend on his household and family.

· Friends and peers: A consumer’s friends also tend to make a big impact on the products they purchase, as the influence of peers is like no other, and people tend to turn to social media (YouTube, Facebook, blogs) to seek reviews before buying a product. Based on a study in Turkey, 46% of the respondents believed that the most important factor when buying goods and services were environment and friends.

· Age: Millennials are more inclined to shop online as compared to their baby boomer counterparts, and thus, a lot of brands focus on their social media marketing. Baby boomers are more likely to be influenced by television advertisements as compared to millennials. To appeal to all sorts of age groups, brands must avoid stereotyping, and reward loyalty and positive reviews (and at the same time, respond to negative reviews immediately and rectify the same).

Psychological

It is important to understand the psychological factors that affect an individual to properly market to them, and focus on their motivations to make the purchase, and their brand perception.

To understand motivations, it is important to understand why a consumer may need the product presented by a company. By aiming at basic needs, a company can successfully pitch their product.

The perception of a brand plays a major role in consumer choices as well. For example, Apple is seen as a premium brand, and buyers believe that using its products makes it seem that they belong to higher social class/ economic bracket.

There are three basic processes through which individuals perceive what they want to when in contact with media messages:

· Selective attention: It is seen that customers are more inclined to focus on ads that show a product they desire. E.g., someone planning to buy a laptop is more likely to pay attention to ads for the same. In order to make their ads stand out, companies use stimuli like sound and colour.

· Selective distortion: Customers often distort information based on product beliefs (previous experience with brand and their marketing activity). Thus, strong brands or those with great marketing presence, can put out ambiguous advertisements; a customer who has seen the brand’s ads will still be able to perceive it in a positive light.

· Selective retention: Consumers tend to retain information that supports their beliefs. In order to make their brand get noticed, companies tend to use repetition.

Economic

It goes without saying that economic factors play a massive role in consumer behaviour, i.e., one’s financial position also dictates their purchases. For example, the CEO of a company is more inclined to buying luxury goods as compared to a clerk. Thus, one’s disposable income defines their purchasing power.

It is not just an individual’s purchasing power that matters, a family income is also taken into consideration. Low-income families are likely to have lesser demands, and hence, aim to purchase lesser (but long lasting) products.

Even market conditions have a huge impact on one’s purchasing power. In a study conducted to gauge the effect of recession on buying behaviour (New Delhi, India), it was found that nearly 53% respondents decreased the frequency of shopping as a direct effect of economic slowdown. It goes without saying that during such economic slowdowns, consumers are less inclined to purchase luxury goods and services, and instead opt for products of inferior quality, which are cheaper.

By taking into consideration the market conditions, brands can steer their advertisements and media messages in a way that even appeals to consumers in times of uncertainty, or even whether or not it is the right time to introduce a product into the market.

Leveraging the factors to build your brand

There is no greater corrective example than that of Tata Nano. Tata Nano was launched in India in 2009, and quickly became known as ‘the cheapest car in the country’. Unfortunately, in a country like India, where a car is associated with prestige and social status, Nano’s sales plummeted.

By taking into account this economic factor, the brand could have presented the car as an upgrade from a two-wheeler. However, as the company was not able to rectify or remove the tag of “cheap”, the Nano was ultimately a failure.

Consumers need the right incentive to switch brands. They are likely to switch to a brand whose brand image speaks to their own image, that appeals to their sensibilities. This can be done by taking into consideration cultural, social, and psychological factors, based on the product.

For example, if a brand is selling a side-by-side refrigerator, then they can appeal to:

1. Sub-cultural (geographic/climatic) factor: Someone living in a warm country may need it more than someone living in a colder region.

2. Social: Side-by-side refrigerators keep frozen and refrigerated food within easy reach, and are designed to accommodate larger plates and platters. Keeping this in mind, brands can choose to show it as an essential product for a large family, or a family that hosts a lot.

3. Psychological: If the customer is someone living in a warm country, they must need the refrigerator to keep their drinks cold and refreshing.

Yet another example is that of smartphones. They must target users between the ages of 18–29, as 92% of that age demographic (*2015, USA) own a smartphone, as opposed to 42% of the 65+ age demographic. By showing young users in advertisements, and offering a multitude of features, brands can entice younger users.

Consequently cell-phone (not smartphone) companies must target the 65+ age demographic, as 38% of them own a cellphone, as opposed to 8% of the 18–29 demographic. This can be done by showing convenience in usage (to create the need) and user-friendly interface.

Conclusion

If a company wants to gain greater market share, it is important to focus on customers, and thus understand, analyze, and keep up with their behaviour. While the four factors discussed here are the basic ones, there are various other factors that are taken into consideration based on these, such as education, lifestyle, and diet, which are highly specific and vary on an individual level.

For example, monkfruit sweetners are about 100 times sweeter than sugar, and are known to have zero calories, zero carbohydrates, zero sodium, and zero fat. Thus, it can be marketed towards people that are dieting, and can be shown to be healthy and sweet, but not causing harm like the excessive consumption of sugar does. Additionally, as monkfruit is a zero-calorie sweetener, it will not affect blood sugar levels and may be a good option for people with diabetes, thus making it easy to market to people with diabetes.

In order to enter new markets or even launch new products, a company must overcome economic and cultural hurdles, and appeal to its customers’ social and psychological aims and needs.