If the economy is strong, consumers have more purchasing power and money is pumped into the thriving economy. Personal factors can also affect the consumer behavior. 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, Economic model of Consumer Behaviour. Social determinants such as culture, family, peers and meal patterns 5. Some of the important personal factors that influence the buying behavior are: lifestyle, economic situation, occupation, age, personality and self concept. Ahmed, E.-K. (2012, November 1). In this model, consumers follow the principle of maximum utility based on the law of diminishing marginal utility. 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. Competitors. 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. 4. Suppliers. Required fields are marked *, Economic Factors Influencing Consumer Behavior. Growing up, children learn basic values, perception and wants from the family and other important groups. policies, etc. … Personal Income: Income of a consumer is most important factor affecting the demand and subsequently the purchase decisions. CPG companies can adapt to these changes by taking action to respond, reset and renew to be positioned even stronger for the future. Lifestyle, a term proposed by Austrian psychologist Alfred Adler in 1929, refers to the way … Factor affecting Consumer Behavior. 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. However, there are several factors affecting buying decisions and consumer behavior. Business Dictionary: Law of Supply and Demand. As the change comes in these factors, consumer behaviour also changes. Note: Apart from these factors other economic conditions such as inflation, recession, business cycles, etc. How you supply your goods, i.e., the distribution chain. COVID-19 is a health and economic crisis that has a sustainable impact on consumer attitudes, behaviors and purchasing habits. The reaction, as a consumer, of an 18-year-old teenager has nothing to do with that of a 68-year-old veteran. Consumer spending is one of the most important driving forces for global economic growth. At the moment we are born, our requirements are usually very basic (food, care, etc.). The more the disposable personal income in hand the more is the expenditure on various items and vice-versa. Social factors play an essential role in influencing the buying decisions of consumers . 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. Social Factors affecting Consumer Behaviour Consumer Behaviour is an effort to study and understand the buying tendencies of consumers for their end use. Lee holds a Bachelor of Arts in international relations from the University of California, Irvine, and an M.B.A. from Concordia University. Lower income families have less demand than prosperous families. There are four psychological factors that influence consumer behaviour: Motivation, perception, learning, and attitude or belief system. Beyond impacting some of the factors that determine consumer spend—such as consumer confidence, unemployment levels, or the cost of living—the COVID-19 pandemic has also drastically altered how and where consumers choose to spend their hard-earned cash. Understanding how to motivate your customer is a powerful tool. Consumer behavior is influenced by 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. Factors Influencing Consumer Behaviour: Consumer behaviour is affected by a number of factors. There are many factors affecting consumer behaviour. Age. The needs are also different. Due to impact of various factors, consumers react or respond to marketing programme differently. And like previous economic recessions, young people are going to be the hardest hit. 3. 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. 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. Physical determinants such as access, education, skills (e.g. Lifestyle. An increase in inflation means an increase in prices. International Journal of Business and Social Science, 147-158. Factors affecting consumer behavior of purchasing tobacco products . 10 Consumer Behavior Differences between developed and developing Countries. Psychological Factors Influencing Consumer Behavior, Social Factors Influencing Consumer Behavior, Cultural Factors Influencing Consumer Behavior, Personal Factors Influencing Consumer Behavior. Economic determinants such as cost, income, availability 3. Motivation speaks to the internal needs of the consumer. cooking) and time 4. Psychological factors also play a pivotal role in consumer behavior. If the economy is struggling, the reverse is true. Understanding how consumer behavior impacts marketing renders it vital to understand those factors which affect consumer behavior and which include: Cultural Factors. Supply. Below are some microeconomic factors that may influence a business: 1. Demand. 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. 2. Age and Life Cycle: The activities of individuals and families vary over time.

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