It’s important for any marketer or small business owner to understand the factors that influence consumer behavior. Consumer behavior basically refers to the way in which customers select, buy, use, and dispose of goods and services.
When you understand how potential customers think about and reach a buying decision, you can better tailor your product to fill a gap in the market, or present it in a way that communicates maximum value to your target market.
There are 5 main factors that influence consumer behavior: psychological, personal, economic, social, and cultural factors. Let’s take a look at them in more detail.
1. Psychological Factors
When a customer is ready to purchase a product, like a new dress, psychological factors that will influence their decision include motivation, perception, learning, attitude and beliefs.
Think of the difference between choosing a new dress to wear to a family wedding you dread attending, versus a date you’ve been looking forward to all week. That’s motivation and it will significantly influence the amount of time and money you’re willing to spend.
If you want to purchase a dress that’s lined, has strong seams, and is easy to wash, that’s learning influencing your selection of materials. Similarly, if you want a sustainable fabric produced with minimal impact on the environment, like hemp, you’re buying decision is being influenced by your values.
Perception, beliefs, and attitudes also play an influential role.
2. Economic Factors
There’s no way around it. Buying products requires money, so economic factors are among the most important influences on consumer behavior. Economic factors are everything relating to your finances, including personal income, family income, savings, consumer credit, and liquid assets.
When buying a car for example, a teen who just got their license will have very different priorities to a seasoned business manager in his prime. The marketing strategies you’ll need to attract these two customers will be very different.
3. Personal Factors
Personal factors relate to your target market demographic. These factors include your customers’ age, gender, income, occupation, ethnicity, and lifestyle.
Let’s go back to that dress shop. A secretary may want by a simple black A-line dress to wear to the office, while the same dress may not be suitable for a beautician or hairdresser to wear to their work. Similarly, a 16-year-old and a 60-year-old will look for very different things when buying a new dress.
4. Social Factors
It should be no surprise that our purchasing behavior is influenced by our social surroundings. Social factors include family, friends, and reference groups, as well as social status and social roles.
This goes much further than wanting the latest iPhone before your friends. A woman with children will want to buy children’s clothing and toys while an otherwise similar woman without children won’t. Similarly, married couples in their mid 20s may reach a different purchase decision to singles in their mid 20s.
Social status can predict the items someone is ‘expected’ to own. Lower-income households might be interested in sports branded clothing while suburban families may want to impress their neighbors with a large barbecue and outdoor setting.
5. Cultural Factors
Cultural factors refer to the community, sub-culture, and social class you belong to. For example, an American with Asian decent may prefer Chinese food over a burger and fries for lunch.
Hipsters may value plant-based food and products with an ethical focus while other sub-cultures may be less mindful of these factors.
These are just some of the ways in which cultural factors can influence consumer behavior.