Key Factors Influencing Consumer Choices and Behavior

Posted on Mar 28, 2025 in Business Management and Marketing

Defining Consumer Behavior

Consumer behavior is the study of the processes involved when individuals or groups select, purchase, use, or dispose of products, services, ideas, or experiences to satisfy needs and wants.

Theoretical Framework of Customer Behavior

The study draws upon disciplines such as:

• Anthropology
• Sociology
• Psychology

Factors Affecting Consumer Behavior

Internal Factors

• Personality
• Lifestyle
• Age
• Lifecycle Stage

Demographics

Five common demographic attributes influencing behavior:

• Age: As people grow, their needs change. This appears in buying decision-making, particularly as health-related needs evolve.
• Gender: Men and women often have different needs, especially in fashion and lifestyle, leading to different purchasing behaviors. Some needs, like food and entertainment, can be similar.
• Income: Different income levels result in differences in product choices. The middle class often makes decisions based on utility, while high-income individuals may spend more on luxury and lifestyle items.
• Ethnicity: Major groups include Asian, European, American, Latin American, and African, each potentially having distinct preferences.
• Religion: Major religions like Buddhism, Christianity, Hinduism, and Islamism can influence values and consumption.

Political Factors

Key political factors include age demographics, laws, and political stability. E.g., Brexit impacted various industries; Scottish fishermen hoped leaving the EU would boost their industry, while UK-based car manufacturers like Jaguar/Land Rover were worried about losing free access to wealthy customers in France and Germany.

Cultural Factors

Culture has a significant influence on patterns of consumption and decision-making. E.g., food choices are strongly linked to culture.

Sub-culture

A sub-culture is a set of beliefs shared by a subgroup within a main culture. This includes nationalities, religions, racial groups, and geographical regions. It’s a segment within a larger culture whose members share distinguishing values and behavioral patterns.

Major Subculture Categories

Religious Subculture

Religion can directly affect consumer behavior, especially symbolically and through rituals associated with the celebration of religious holidays.

Social Class

Individuals from the same social class often share similar values, interests, and behaviors.

Economic Factors

Economic influences include:

• Personal income
• Family income
• Income expectations
• Savings
• Liquid assets of the consumer
• Consumer credit availability

Environmental Factors

• Supply & Demand: If a product becomes very expensive, demand typically falls.
• Inflation: Increased inflation generally leads to increased prices.
• Interest Rate: With higher interest rates, consumers are less inclined to borrow money from banks to buy major items like cars or houses.
• Unemployment: Unsteady income decreases purchasing power considerably.
• Consumer Confidence: More confident consumers tend to purchase greater amounts of goods.

Social Factors

• Family:
  • Nuclear Family: Typically parents and children under 18.
  • Joint Family: Can include grandparents, uncles, parents, etc.
  • Family of Orientation: The influence of parents has a strong effect on buying habits.
  • Family of Procreation: Formed by a spouse and children; purchasing habits and priorities change due to the influence of the spouse and children.
• Reference Groups: Two or more people sharing a set of norms. They strongly influence a person’s attitudes, values, and behavior, directly or indirectly.
• Role & Status: A person participates in many groups (family, clubs, organizations). A role consists of the activities a person is expected to perform, and each role carries a status.

Understanding Culture

Culture is the accumulation of shared meanings, rituals, norms, and traditions among members of an organization or society. It encompasses shared beliefs, attitudes, norms, roles, and values among speakers of a particular language who live during the same period in a specific geographic region.

Characteristics of Culture

• Culture is learned.
• It is common to members of a certain group.
• It determines the behavior of group members.
• Culture makes life more effective through established customs, values, and habits.

Culture and Customer Behavior

• Core values define the usage and perception of products.
• Culture influences positive/negative associations with brands and communication programs.
• Culture defines the ideology of consumption.

Causes of Dissolving Boundaries Across Nations

• Multinationalization and globalization
• World tourism
• World sports events
• Global communication (media)
• Global education initiatives
• Global workforce mobility
• Global organizations

Global Marketing Concepts

Transnational Company

A global network of productive units with a decentralized authority structure and no distinct single national identity. It relies on a blend of global and local strategies.

World Brands

Products manufactured, packaged, and positioned the same way regardless of the country in which they are sold.

• Counterargument: Local culture often remains influential on customer behavior, leading to heterogeneous consumption patterns.

Elements Leading to Heterogeneity

• Institutions
• Norms
• Values
• Beliefs
• Religion
• Language
• Education system
• Lifestyle

Specific Subcultural Behaviors

Hispanic Customer Behavior

• Stronger preference for well-established brands.
• Tendency to prefer shopping at smaller stores.
• Some are shifting food shopping to non-ethnic stores.
• Youths tend to be more fashion-conscious than non-Hispanic youths.

Hispanic American Market Insights

• Prefer well-known or familiar brands.
• May view brands as more prestigious.
• Fashion-conscious.
• Historically preferred shopping in smaller stores.
• Respond well to brands advertised by their ethnic groups, often in Spanish.
• Generally not impulse buyers.
• Engage in clipping and using cents-off coupons.
• Likely to buy brands their parents bought.
• Prefer fresh over frozen or prepared items.
• May hold negative views about certain marketing practices.

Asian Americans

A rapidly growing subculture, largely due to immigration. They are the most diverse group, encompassing many nationalities, languages, and religions. They have the highest average household income of any major ethnic group in the U.S.

Marketing to African Americans

• Consider product preferences specific to the community.
• Focus on retailing experiences: Over 60% of African Americans report choosing stores that treat them with respect, often due to past experiences of disrespect.

Major Age Subcultures and Marketing

Generation X

Born from the mid-1960s to the early 1980s (between Baby Boomers and Millennials).

• Marketing Tip: Offer discounts. Gen X grew up with various discount offers in newspapers, magazines, and on TV.
• Marketing Tip: Create loyalty programs.
• Marketing Tip: Feature written reviews and testimonials.

Generation Y (Millennials)

Born approximately 1977–1994 (also called Echo Boomers).

• Marketing Tip: Ask for feedback and engage in dialogue.
• Marketing Tip: Be transparent; don’t hide information.
• Marketing Tip: Know where they gather online and offline.

Generation Z

Born approximately 1996–2010.

• Value-conscious.
• Drawn to brands that “keep it real” and are authentic.
• Marketing How-to: Trust and communication are important.
• Marketing How-to: Utilize platforms like Instagram effectively, often through influencers, not just traditional ads.

Baby Boomers

Born approximately 1946–1964 (a significant portion of the adult population).

• Marketing Tip: Avoid slang and excessive abbreviations.
• Marketing Tip: Ensure websites are mobile-responsive.
• Marketing Tip: Avoid clickbait headlines.
• Marketing Tip: Provide helpful, clear information.
• Marketing Tip: Determine the best social media platforms to reach them (e.g., Facebook).

Seniors

Older customers, often considered the 50+ market or “elderly consumers.”

• Marketing Tip: Use relatable language.
• Marketing Tip: Don’t assume other people make their buying decisions for them.
• Marketing Tip: Understand their purchasing criteria may differ significantly from younger generations.

Issues Understanding Sex as a Subculture

• Traditional concepts of Masculine / Feminine roles and traits.
• Working women: This group presents segmentation challenges and distinct shopping patterns.

Segmenting the Working Women Market

• Stay-at-home housewives
• Plan-to-work housewives
• Just-a-job working women
• Career-oriented working women

Cross-Cultural Considerations

Cross-Culture Definition

Cross-culture recognizes differences among businesspeople of different nations, backgrounds, and ethnicities and emphasizes the importance of bridging these differences.

Cross-Cultural Analysis

Cross-cultural analysis determines the extent to which consumers of two or more nations are similar or different.

Why Pursue Global Markets?

• Multinational Fever: The allure of attractive multinational markets, products, or services.
• Growth Opportunity: Overseas markets offer potential for future growth, especially when home markets mature.
• Consumer Interest: Consumers around the globe are often eager to try “foreign” products.

Middle Class Growth Projections

• By 2020, the global middle class was projected to grow from 30% to 52% of the world’s population.
• By 2025, China is projected to have the world’s largest middle class.
• By 2025, India’s middle class is projected to be 10 times larger than it was in the preceding years.

Acculturation

Acculturation is the process where marketers learn (via cross-cultural analysis) about the values, beliefs, and customs of other cultures and then apply this knowledge to marketing products internationally.

Customization Examples

Adapting products and marketing to local tastes:

• Japan: Different character representation (Donald McDonald vs. Ronald McDonald).
• Japan: Offering corn soup and green tea milkshakes at McDonald’s.
• Sweden: McDonald’s using softer design elements and wood-cut style packaging.
• France: Introduction of the McBaguette.
• Philippines: Offering rice and spaghetti as side dishes at fast-food chains.

Consumerism: Rights and Responsibilities

Consumerism Definition

Consumerism refers to a wide range of activities by government, business, and independent organizations designed to protect the rights of the consumer.

Origin of Consumerism

It partly arose because the profit-making attitude of businesses sometimes failed to discharge social responsibilities, such as maintaining fair prices and product quality (e.g., toothpaste tubes filled mostly with air).

Reasons for the Consumerist Movement

• Socio-psychological factors
• Business mistakes and unethical practices
• Information mismatch between buyers and sellers
• Economic constraints on consumers
• Higher educational levels leading to greater awareness

Companies’ Reaction to Consumerism

• Initial refusal to believe change was necessary (though many are now more responsible).
• Attacking consumerist accusations.
• Seeking agreement (e.g., on pricing, regulations with government).

Advantages of Consumerism

• Lifestyle Choice: Consumers can choose the goods they wish to own, reflecting their desired lifestyle.
• Self-Satisfaction: Consumption addresses both basic needs and aspirational wants.
• Reflecting Economic Classes: Choices can reflect or aspire to middle, upper, or lower economic classes.
• Motivation: Consumers have the opportunity to be motivated to improve their social standing and job prospects through consumption choices.

Examples of Consumerism in Action

• Education: Investing in education for future job prospects and earning potential.
• Buying a Car: Purchasing a vehicle for family use, convenience, or status.
• Investing: Putting money into a business or assets for potential future profits.
• Healthcare: Choosing private hospitals for perceived better quality of care.
• Housing: Paying more for a house in a desirable location for benefits like safety and quality of life.

Consumer Responsibilities

• Critical Awareness: Being alert and questioning prices, quality, etc.
• Action: Asserting oneself and acting to ensure a fair deal.
• Social Responsibility: Considering the impact of consumption on other citizens.
• Environmental Awareness: Understanding the environmental consequences of consumption.
• Solidarity: Organizing together as consumers to develop collective influence.

Rights of the Consumer

• Right to be Informed: Access to facts needed to make informed choices.
• Right to Safety: Protection against hazardous products (e.g., warranties reduce purchase risk).
• Freedom to Choose: Access to a variety of products and services at competitive prices.
• Right to Consumer Education: Acquiring knowledge and skills to be an informed consumer (e.g., product demonstrations).
• Right to Redress: Ability to claim against the seller for misrepresentation or unsatisfactory goods/services.
• Right to a Healthy Environment: To live and work in an environment that is not threatening to well-being, including ecological balance and freedom from pollution.

Practices of a Wise Consumer

• Consider various options; don’t focus only on one sale or brand.
• Prioritize buying basic and important needs.
• Check product quality and understand how to use and maintain items properly.

Ethical Consumerism

Ethical consumerism involves being aware of the consequences of your purchasing decisions and choosing to spend money in a responsible way.

• Our consumption significantly affects the environment. In the UK, for instance, nearly a tonne of waste is generated per person each year.
• Waste often ends up in landfill sites, which spoils large areas, or is incinerated, contributing to greenhouse gas emissions.

Reducing Environmental Impact

Reducing consumption can lessen contributions to environmental problems like global warming and waste disposal, and can also help save money. Simple actions include:

• Switching off electrical appliances when not in use.
• Re-using plastic bags.
• Recycling newspapers, magazines, bottles, and cans.
• Walking, cycling, or sharing transport instead of driving alone.
• Buying second-hand goods when appropriate.