What are the 5 main factors that influence purchasing decisions?

Consumer behavior is fascinating to me. Why people buy isn’t always a straightforward question. The factors influencing consumer behaviour can seem endless and impossible to pin down. In my experience, there are five major driving forces: self-interest, barriers, perception, demographics, and culture.

Self-Interest

Self-interest is one of the most important driving forces of consumer behavior. Everyone wants to know what’s in it for them. What will they get if they purchase a product or service?

Self-interest isn’t selfish. We all see the world from an I-perspective. If you think about your thoughts, I will bet that they are mostly concerned with your problems and challenges. If something happens, we instantly think of what it means to us. Are we affected? Can we help?

Self-interest naturally translates into our buying behavior. Everything we buy has to help us tangibly. This doesn’t mean that it will be a positive experience. We often buy things like personal fitness coaching, which tends to be painful and uncomfortable, but we believe there are positive benefits behind all this working out.

As a company, you need to think about how your product fulfills your customers’ self-interest. It has to be logical and not based on grandiose assumptions. In recent news, Quibi, the video streaming service, shut down. Despite raising over 2 billion dollars and producing Hollywood level content, they couldn’t find a model that worked.

They didn’t want to pivot from their original premise of short content (under 10 mins) to a longer form product. People didn’t care enough, and it didn’t align with their customers’ self-interest. You can’t assume that people will merely buy it because your product or service is the best. They will buy it because there’s something in it for them.

Difficulty or Barriers

Our second factor is difficulties or barriers. We may want something, but if it is too hard to get, then we won’t purchase it or do it. This factor determines the difficulty in following through with the intended behavior.

I’m writing this in the era of COVID-19, and I’m fascinated by how we all handle the restrictions, masks, and plexiglass barriers. As it turns out, wearing a mask and speaking from behind plexiglass makes it challenging to understand each other. This is why you will often see people going around the plexiglass barrier to getting their point across.

This is an example of something that becomes a barrier to our natural behavior. We want or need to communicate with people, such as when we order our morning coffee. The plexiglass and wearing a mask make this challenging, so we unconsciously try to get around it.

If you want to look at a product with almost no barriers, then look towards social media. Apps like Facebook, Instagram, and TikTok have virtually no friction to using them. You access them on your phone, which is always on you, and within a couple of taps, you can be consuming an endless amount of content.

As a company, you want to think about what barriers you’re putting up for your customers. Do they have to call to make an order when online checkout could suffice? Do they have to visit your store in person to buy something instead of reserving online? Think about putting up the correct barriers and avoid unnecessary ones.

Perception

Perception is our third consumer behavior factor. This is how your customers perceive your products and services. Customers may think that a brand offers premium products and premium prices, but the quality of the products themselves may not match this expectation.

Customer loyalty is an excellent example of how the right perception can be created. High loyalty makes it easier for customers to ignore any issues they might face. Perhaps their package was delayed, or they have to wait to buy your products continually. They will accept these barriers (see the second factor) because of their overall positive perception of your company.

Companies that have developed a consistent positive perception, including Starbucks, Apple, and McDonald’s. You may not like the food at McDonald’s, but they offer a consistent experience globally. You know exactly what to expect and what you get from your money.

Demographics

Demographics slots in as the fourth factor of consumer behavior. We can’t ignore who the customer is and how their history will affect their purchase behavior. Demographics include gender, age, income, location, and others.

This is one of the most talked-about factors because it is obvious. We know that teenagers have different preferences than someone who is in their sixties and retired. Women will buy different colors than men. High-income individuals spend their money differently than a low-income customer.

Culture

The fifth and final factor is culture. I define culture as the expectations and pressures from people around me. Latin cultures tend to be more open toward strangers, and there’s an expectation of kissing people when you first meet them and when part ways. The culture of a society shapes these behaviors.

Culture can also happen on a microcosm. If you’re at a party, there will be certain expectations for how you should act and what you should do. Once you leave, those expectations will disappear.

If we look at another example from COVID-19, we can see the role of culture play out in whether we wear masks. Some countries and cities are enforcing them while others are not. Going a step forward, some countries (especially Asian ones) find them completely normal, while others think they are weird.

As a company, you want to be aware of the forces that shaped your customers’ culture. They may want to buy your products, but they may not do it if it goes against the culture.

When trying to understand consumer behavior, focus on the five major factors before going down into the weeds. By designing your products around these ideas, you’re more likely to find customers who not just like them but love them.

How and why do people make a decision to buy? Well this is indeed a difficult question to answer as there are many different types of buyers, some being those basic impulse buyers and some are those who use a totally intense system and make thorough investigation before making a purchase decision. While these different types of buyers take their purchase decision in different ways there are 7 important factors that influence all the buying decisions. Let’s discuss the 7 most important factors that Influence the buying decision of a consumer.

Important Factors That Influence The Buying Decision

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1. Economic Factor

The most important and first on this list is the Economic Factor. This one is the main foundation of any purchasing decision. The reason is simple people can’t buy what they can’t afford. The need of a product also doesn’t play a role here, but the most important thing is affordability.

2. Functional Factor

The factor is totally about needs, backed by a logic that what makes sense and also fits in the best interest of the customer. This one factor also plays a very important role in the buying decision.

3. Marketing Mix Factors

There are 4 components in the marketing mix, i.e. product, pricing, promotion and place of distribution and each of these components have a direct or indirect impact on the buying process of the consumers. The consumers consider various things like the characteristics of the product, price charged, availability of the product at the required location and much more.

4. Personal Factors

The personal factors include age, occupation, lifestyle, social and economic status and the gender of the consumer. These factors can individually or collectively affect the buying decisions of the consumers.

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5. Psychological Factor

When it comes to the psychological factors there are 4 important things affecting the consumer buying behaviour, i.e. perception, motivation, learning, beliefs and attitudes.

6. Social Factors

Social factors include reference groups, family, and social status. These factors too affect the buying behaviour of the consumer. These factors in turn reflect an endless and vigorous inflow through which people learn different values of consumption.

7. Cultural Factors

Cultural factors have a subtle influence on a consumer’s purchasing decision process. Since each individual lives in a complex social and cultural environment, the kinds of products or services they intend to use can be directly or indirectly be influenced by the overall cultural context in which they live and grow. These Cultural factors include race and religion, tradition, caste and moral values.

Consumer behaviour can indicates different things like how individuals or groups choose to buy, use and dispose goods or services, to satisfy their needs and desires. Hence it is important to understand that the consumer behaviour is affected by several factors.

To have a good knowledge of the factors affecting the consumer behaviour contact iSN Global Solutions for our Sales Support Services. We offer excellent Account Profiling services and can provide the factors influencing the buying decision in the market. We assure the data and statistics are taken from verified sources at ISN.

Psychological Factors
Social Factors
Cultural Factors
Personal Factors
Economic Factors

Consumer behavior is influenced by many different factors. A marketer should try to understand the factors that influence consumer behavior. Here are 5 major factors that influence consumer behavior:

1. Psychological Factors

Human psychology is a major determinant of consumer behavior. These factors are difficult to measure but are powerful enough to influence a buying decision.

Some of the important psychological factors are:

i. Motivation

When a person is motivated enough, it influences the buying behavior of the person. A person has many needs such as social needs, basic needs, security needs, esteem needs, and self-actualization needs. Out of all these needs, the basic needs and security needs take a position above all other needs. Hence basic needs and security needs have the power to motivate a consumer to buy products and services.

ii. Perception

Consumer perception is a major factor that influences consumer behavior. Customer perception is a process where a customer collects information about a product and interprets the information to make a meaningful image of a particular product.

When a customer sees advertisements, promotions, customer reviews, social media feedback, etc. relating to a product, they develop an impression about the product. Hence consumer perception becomes a great influence on the buying decision of consumers.

iii. Learning

When a person buys a product, he/she gets to learn something more about the product. Learning comes over a period of time through experience. A consumer’s learning depends on skills and knowledge. While skill can be gained through practice, knowledge can be acquired only through experience.

Learning can be either conditional or cognitive. In conditional learning the consumer is exposed to a situation repeatedly, thereby making a consumer to develop a response towards it.

Whereas in cognitive learning, the consumer will apply his knowledge and skills to find satisfaction and a solution from the product that he buys.

iv. Attitudes and Beliefs

Consumers have certain attitudes and beliefs which influence the buying decisions of a consumer. Based on this attitude, the consumer behaves in a particular way towards a product. This attitude plays a significant role in defining the brand image of a product. Hence, marketers try hard to understand the attitude of a consumer to design their marketing campaigns.

Humans are social beings and they live around many people who influence their buying behavior. Humans try to imitate other humans and also wish to be socially accepted in the society. Hence their buying behavior is influenced by other people around them. These factors are considered as social factors. Some of the social factors are:

i. Family

Family plays a significant role in shaping the buying behavior of a person. A person develops preferences from his childhood by watching family buy products and continues to buy the same products even when they grow up.

ii. Reference Groups

A reference group is a group of people with whom a person associates himself. Generally, all the people in the reference group have common buying behavior and influence each other.

iii. Roles and status

A person is influenced by the role that he holds in the society. If a person is in a high position, his buying behavior will be influenced largely by his status. A person who is a Chief Executive Officer in a company will buy according to his status while a staff or an employee of the same company will have different buying pattern.

3. Cultural factors

A group of people is associated with a set of values and ideologies that belong to a particular community. When a person comes from a particular community, his/her behavior is highly influenced by the culture relating to that particular community. Some of the cultural factors are:

i. Culture

Cultural Factors have a strong influence on consumer buying behavior. Cultural Factors include the basic values, needs, wants, preferences, perceptions, and behaviors that are observed and learned by a consumer from their near family members and other important people around them.

ii. Subculture

Within a cultural group, there exists many subcultures. These subcultural groups share the same set of beliefs and values. Subcultures can consist of people from different religion, caste, geographies and nationalities. These subcultures by itself form a customer segment.

Each and every society across the globe has the form of social class. The social class is not just determined by the income, but also other factors such as the occupation, family background, education and residence location. Social class is important to predict the consumer behavior.

4. Personal Factors

Factors that are personal to the consumers influence their buying behavior. These personal factors differ from person to person, thereby producing different perceptions and consumer behavior.

Some of the personal factors are:

i. Age

Age is a major factor that influences buying behavior. The buying choices of youth differ from that of middle-aged people. Elderly people have a totally different buying behavior. Teenagers will be more interested in buying colorful clothes and beauty products. Middle-aged are focused on house, property and vehicle for the family.

ii. Income

Income has the ability to influence the buying behavior of a person. Higher income gives higher purchasing power to consumers. When a consumer has higher disposable income, it gives more opportunity for the consumer to spend on luxurious products. Whereas low-income or middle-income group consumers spend most of their income on basic needs such as groceries and clothes.

iii. Occupation

Occupation of a consumer influences the buying behavior. A person tends to buy things that are appropriate to this/her profession. For example, a doctor would buy clothes according to this profession while a professor will have different buying pattern.

iv. Lifestyle

Lifestyle is an attitude, and a way in which an individual stay in the society. The buying behavior is highly influenced by the lifestyle of a consumer. For example when a consumer leads a healthy lifestyle, then the products he buys will relate to healthy alternatives to junk food.

5. Economic Factors

The consumer buying habits and decisions greatly depend on the economic situation of a country or a market. When a nation is prosperous, the economy is strong, which leads to the greater money supply in the market and higher purchasing power for consumers. When consumers experience a positive economic environment, they are more confident to spend on buying products.

Whereas, a weak economy reflects a struggling market that is impacted by unemployment and lower purchasing power.

Economic factors bear a significant influence on the buying decision of a consumer. Some of the important economic factors are:

i. Personal Income

When a person has a higher disposable income, the purchasing power increases simultaneously. Disposable income refers to the money that is left after spending towards the basic needs of a person.

When there is an increase in disposable income, it leads to higher expenditure on various items. But when the disposable income reduces, parallelly the spending on multiple items also reduced.

ii. Family Income

Family income is the total income from all the members of a family. When more people are earning in the family, there is more income available for shopping basic needs and luxuries. Higher family income influences the people in the family to buy more. When there is a surplus income available for the family, the tendency is to buy more luxury items which otherwise a person might not have been able to buy.

iii. Consumer Credit

When a consumer is offered easy credit to purchase goods, it promotes higher spending. Sellers are making it easy for the consumers to avail credit in the form of credit cards, easy installments, bank loans, hire purchase, and many such other credit options. When there is higher credit available to consumers, the purchase of comfort and luxury items increases.

iv. Liquid Assets

Consumers who have liquid assets tend to spend more on comfort and luxuries. Liquid assets are those assets, which can be converted into cash very easily. Cash in hand, bank savings and securities are some examples of liquid assets. When a consumer has higher liquid assets, it gives him more confidence to buy luxury goods.

v. Savings

A consumer is highly influenced by the amount of savings he/she wishes to set aside from his income. If a consumer decided to save more, then his expenditure on buying reduces. Whereas if a consumer is interested in saving more, then most of his income will go towards buying products.