Note: Apart from these factors other economic conditions such as inflation, recession, business cycles, etc. Consumer spending is one of the most important driving forces for global economic growth. Understanding these factors can help businesses ensure they're providing products at the right prices. Ahmed, E.-K. (2012, November 1). And like previous economic recessions, young people are going to be the hardest hit. 4. If the economy is struggling, the reverse is true. Interest rate fluctuations affect consumer spending because when rates are high, consumers are less inclined to borrow money from the banks to purchase big-ticket items such as a house or a car. 3. Understanding how consumer behavior impacts marketing renders it vital to understand those factors which affect consumer behavior and which include: Cultural Factors. As the change comes in these factors, consumer behaviour also changes. An Analysis of Factors Affecting the Consumer's Attitude of Trust and their Impact on Internet Purchasing Behaviour. With regard to the latter, there is a curious phenomenon. From the early year, Peterson (1987) found that socialization which is determined the way of patterns of behaviour or the process by which the person can adopt social roles. Personal factors can also affect the consumer behavior. Definition: The Economic Factors are the factors that talk about the level of sales in the market and the financial position of the consumer, i.e. â¦ These all factors jointly shape consumer behaviour. The modern consumer is a construct of growing economic pressure and increasing competitive options. Social factors play an essential role in influencing the buying decisions of consumers . The success or failure of a nation's economy can greatly affect consumer behavior based on a variety of economic factors. Copyright 2020 Leaf Group Ltd. / Leaf Group Media, All Rights Reserved. Business Dictionary: Law of Supply and Demand. Social Factors affecting Consumer Behaviour Consumer Behaviour is an effort to study and understand the buying tendencies of consumers for their end use. Suppliers. Some personal (internal) factors include age, lifestyle, occupation, income, culture and personality. A marketer has to understand such factors so that he can design appropriate products and marketing strategies and ultimately be able to deliver consumer satisfaction. Economic model of Consumer Behaviour. Many factors, specificities and characteristics influence the individual in what he is and the consumer in his decision making process, shopping habits, purchasing behaviorâ¦ The economic environment consists of microeconomic and macroeconomic factors.The microeconomic environment refers to things that happen at the individual company or consumer level.Microeconomic factors do not affect the whole economy. how much an individual spends on the purchase of goods and services that contribute to the overall sales of the company. The more the disposable personal income in hand the more is the expenditure on various items and vice-versa. It is undoubtedly an essential factor. Due to impact of various factors, consumers react or respond to marketing programme differently. cooking) and time 4. Consumer behavior is influenced by cultural factors â¦ After the cultural factors in the study of consumer behaviour, the Social factors also affect the consumer behaviour. policies, etc. Understanding how to motivate your customer is a powerful tool. ... and how factors such as economic situation and health status are driving changes in consumer behavior. Required fields are marked *, Economic Factors Influencing Consumer Behavior. Lifestyle. The law of supply and demand demonstrates the relationship between supply, demand and prices. The success or failure of a nation's economy can greatly affect consumer behavior based on a variety of economic factors. Family Income âIncome of the family. If the economy is strong, consumers have more purchasing power and money is pumped into the thriving economy. An increase in inflation means an increase in prices. How Do Psychological Factors Play a Role in Consumer Behaviour? International Journal of Business and Social Science, 147-158. There are many factors affecting consumer behaviour. However, there are several factors affecting buying decisions and consumer behavior. how much an individual spends on the purchase of goods and services that contribute to â¦ Psychological factors also play a pivotal role in consumer behavior. Growing up, children learn basic values, perception and wants from the family and other important groups. Lifestyle, a term proposed by Austrian psychologist Alfred Adler in 1929, refers to the way â¦ Cultural factors. Age. This relationship attracts more suppliers, serving to not only stabilize the prices but also to keep the demand at healthy consumer levels. Economic man model is based on: Price effect: Lesser the price of the product, more will be the quantity purchased. Some of the other factors that influence food choice include: 1. COVID-19 is a health and economic crisis that has a sustainable impact on consumer attitudes, behaviors and purchasing habits. Age and life-cycle have potential impact on the consumer buying behavior. Unemployment affects consumer behavior because if a person is without a steady income, his purchasing power decreases considerably. For instance, if an individual borrowed money to purchase a home with an adjustable-rate mortgage, once that rate goes up, that individual may no longer be able to afford that house. If the economy is struggling, the reverse is true. In this model, consumers follow the principle of maximum utility based on the law of diminishing marginal utility. According to Trading Economics, the unemployment rate in the United States between October 2009 and December 2009 was the highest it has been since the record high of 10.80 percent in November 1982. Interest rates determine a consumer's purchasing power. CPG companies can adapt to these changes by taking action to respond, reset and renew to be positioned even stronger for the future. Psychological Factors Influencing Consumer Behavior, Social Factors Influencing Consumer Behavior, Cultural Factors Influencing Consumer Behavior, Personal Factors Influencing Consumer Behavior. Physical determinants such as access, education, skills (e.g. Biological determinants such as hunger, appetite, and taste 2. 2. The discretionary personal income is the income left after meeting all the basic necessities of life and is used for the purchase of the shopping goods, luxuries, durable goods, etc. There are four psychological factors that influence consumer behaviour: Motivation, perception, learning, and attitude or belief system. Some of the important personal factors that influence the buying behavior are: lifestyle, economic situation, occupation, age, personality and self concept. She has written for Amnesty International and maintains three blogs. How you supply your goods, i.e., the distribution chain. 1. optimism of consumers, 2. belief in overall good state of economy, 3. willingness to spend money and buy new products, 4. level of spending 5. purchasing power of potential consumers (amount of money or savings available), 6. levels of market demand and supply 7. bargaining power of customers, Supply and demand affect consumer behavior because if a product is too expensive, consumer demand for that product will decrease. As we reach adulthood and enter into it, our life becomes more complex and with it our needs become more compleâ¦ This affects whether or not a consumer is able to afford the higher price. Motivation speaks to the internal needs of the consumer. External issues could include economic situation and political environment. Social determinants such as culture, family, peers and meal patterns 5. Inflation especially affects consumer behavior when wages do not increase to accommodate the increase in prices. Stephanie Lee began writing in 2000 with concentration on food, travel, fashion and real estate. Beyond impacting some of the factors that determine consumer spendâsuch as consumer confidence, unemployment levels, or the cost of livingâthe COVID-19 pandemic has also drastically altered how and where consumers choose to spend their hard-earned cash. Your email address will not be published. ... â Socio-economic status of the population (e.g., education, occupation, employment status) â Rural versus urban area of residence ... consumers to adjust that tobacco use behavior. For the same product, price, promotion, and distribution, their responses differ significantly. The needs are also different. In the big picture, the societal or socioeconomic landscape each consumer inhabits â ranging from the buying power of a country's currency to how purchases are taxed on a state level, for example â influence purchasing behavior, as do factors such as supply and demand and the overall material quality of life in any given region. An increase in the discretionary income results in more expenditure on the shopping goods through which the standard of living of an individual gets improved. Your email address will not be published. Consumer behavior is affected by internal and external issues. Age and family status â¦ Such behavior is largely influenced by various factors. â¦ Culture plays a very vital role in the determining consumer â¦ A group of people are associated with a set of values and ideologies that belong to â¦ A struggling economy affects factors such as employment and interest rates, and the people may lose consumer confidence. Hence we can say that factors affecting consumer buying behaviour during E-Commerce are-: Customer Benefit includes-: Website design helps easy access of sit e, various brands comparabilit y Supply. Economic Factors Influencing Consumer Behavior Definition: The Economic Factors are the factors that talk about the level of sales in the market and the financial position of the consumer, i.e. The consumer wants to spend the minimum amount for maximizing his gains. The following are the main economic factors that greatly influence the consumer buying behavior: The disposable personal income is the income left in hand after all the taxes, and other necessary payments have been made. ADVERTISEMENTS: Everything you need to know about the factors affecting consumer behavior. The demographic factors which affect consumer behavior are: (1) age (2) sex (3) marital status (4) income (5) family background (6) education (7) occupation (8) family size (9) geographic factors (10) psychological factors. Economic determinants such as cost, income, availability 3. If the economy is strong, consumers have more purchasing power and money is pumped into the thriving economy. Personal Income: Income of a consumer is most important factor affecting the demand and subsequently the purchase decisions. 10 Consumer Behavior Differences between developed and developing Countries. Competitors. Consumer Behaviour â Cultural factors. Definition: The Consumer Behavior is the study of how an individual decides to purchase a particular product over the other and what are the underlying factors that mold such behavior. This article focuses on four important demographic factors and the effect they have on consumer behavior. Consumer behavior or purchases made by consumers are rarely unaffected. The reaction, as a consumer, of an 18-year-old teenager has nothing to do with that of a 68-year-old veteran. Factors Influencing Consumer Behaviour: Consumer behaviour is affected by a number of factors. The key driver for eating is of course hunger but what we choose to eat is not determined solely by physiological or nutritional needs. Market size. Inflation directly affects the value of the dollar because when inflation goes up, the dollar's value goes down, and so does the consumer's purchasing power. Factor affecting Consumer Behavior. Consumer spending is impacted by a variety of economic factors, including prices, their own ability to spend, the economy as a whole and what items they prioritize as being the most important. Cultural factors affecting consumer buying behaviour: Cultural factors have a significant impact on customer behavior.Culture is the most basic cause of a personâs wants and behavior. Some of these differences are easily noticeable whereas the others might be a little difficult to observe. Following the 2008 financial crisis, young people were burdened with debt, high unemployment and â¦ Age and Life Cycle: The activities of individuals and families vary over time. Below are some microeconomic factors that may influence a business: 1. 6. The economic factors that most affect the demand for consumer goods are employment, wages, prices/inflation, interest rates, and consumer confidence. 5. also influences the consumer buying behavior.
2020 economic factors affecting consumer behaviour