Factors Influencing Consumer Buying Behaviour!
Answer 1. Psychological Factors Influencing Buyer Behaviour:
Psychological factors are major factors having influence on consumer buying behaviour.
These are:
1. Motivation,
2. Perception,
3. Learning,
4. Beliefs and attitudes.
1. Motivation:
Each person has distinct motives for purchases these motives remain changing with time. Some needs are biogenic; they arise from physiological states of tension such as hunger, thirst, discomfort. Other needs are psychogenic; they arise from psychological states of tension such as the need for recognition, esteem, or belonging. Motivation involves the positive or negative needs, goals, and desires that impel a person to or away from certain actions. By appealing to motives (reasons for behaviour), a marketer can generate motivation.
Consumer Needs and Motivations:
All our needs can be classified into two categories – primary and secondary. Primary needs or motives are the physiological needs, which we are born with, e.g., the need for air, water, food, clothing, shelter and sex. The secondary needs are our acquired needs, which we have developed in response to the individuals’ psychological influenced by our social interaction. The secondary needs may include the need for power, prestige, esteem, affection, learning, status etc. clothing is a primary need for all of us.
Human needs can be explained by the Maslow’s Hierarchy mode of need according to it all human needs can be classified in to five hierarchical categories and this hierarchy is universally applicable the theory of hierarchy of needs can be ranked in order of importance from the low biological needs to the higher level psychological needs.
Each leveled of need is fulfilled people keep moving on the next higher level of need. For marketers Maslow’s hierarchy of human needs is of enormous importance as this model helps them to understand consumer motivations. It is useful for the marketer who can identify what is the actual need of a customer and to design their product and services to satisfy required need.
i. Physiological needs are the basic needs of an individual are i.e. the need for food, shelter, thirst etc. As these are primary needs, an individual first of all tries to satisfy them. Products such as food and clothes are bought to fulfill physiological needs.
ii. Safety needs include physical safety, social and financial security as well as protection against unemployment, loss of income through sickness, accidents etc. Marketing inputs, Insurance, burglar alarms, security services are purchased because the fulfill safety needs.
iii. Social needs recognize that most people want to belong to a group. These would include the need for love and belonging, association with social groups.
iv. Esteem needs are about being given recognition for a job well done, status and position in society. They reflect the fact that many people seek the esteem and respect of others. Luxury products such as jeweler, expensive clothing, fancy house and cars are bought to satisfy esteem needs.
v. Self-actualization is about how people think about themselves at this level people want to fulfill their own desire this is often measured by the extent of success and/or challenge at work.
2. Perception:
Perception is the process by which an individual selects, organizes, and interprets information inputs to create a meaningful picture of the world. Perception depends not only on physical stimuli, but also on the stimuli’s relation to the surrounding field and on conditions within the individual. Perception is what an individual perceive about objects and different individuals have different perceptions of the same object because of three perceptual processes- selective attention, selective distortion, and selective retention, which are of immediate interest to the marketer.
3. Learning:
Learning refers to the skill and knowledge gained from past experience that we apply to evaluate future decisions and situations. Customer always learns new things when they purchase and consume products and services. Their re-purchase depends on previous experience.
4. Beliefs and Attitudes:
Attitudes or opinions are positive, neutral, or negative feelings about goods, services, firms, people, objects and institutions. Marketers always try to develop positive attitude of customers. Attitude is a person’s enduring feeling, evaluation and tendency towards a particular idea or object. It is easier to market product that fits in well with the existing patterns of attitudes rather than change the attitudes to fit a new product concept.
A belief is a descriptive thought that a person has about something. It is a common belief in India that Deshi Ghee is having more fat value than vegetable fats; costly products are having better quality. These beliefs may be based on some real facts or it may merely be a notion or opinion that the person has. The marketer must ensure that consumers have relevant and correct information about the brand to facilitate formation of a positive brand image.
Answer 2. Factors Influencing Consumer Behaviour:
The behaviour of consumer is influenced by a number of factors which are the uncontrollable factors. The combination of various factors like social-cultural, personal, economic, psychological, produce different impact on different individuals and is reflected in our behaviour as a consumer.
A study of these factors become essential for the firm if it wants to use its controllable factors like product, place, promotion and price effectively.
Different factors influencing consumer behaviour are:
(1) Economic Factors.
(2) Personal Factors.
(3) Psychological Factors.
(4) Social Factors.
(5) Cultural Factors.
1. Economic Factors:
Economic factors are the basic guiding factors for any purchasing decision.
The economic capacity of an individual can be judged on the basis of:
i. Personal Income:
Income refers to the purchasing power in the hands of the consumer. The buying behaviour of an individual is influenced by the disposable income he has, which he uses for spending and saving. Disposable income is gross income less taxes, debt repayment, etc. Any increase in disposable income increases consumers spending and he goes for comforts and luxury items.
A decrease in disposable income reduces his spending. Apart from disposable income, discretionary income also plays an important role in influencing consumer behaviour. Discretionary income is the income left with the consumer after meeting his basic necessities of life. The level of discretionary income will determine his purchase decisions. More the discretionary income, more he buys goods to raise his standard of living.
ii. Family Income:
For families living together, the total family income influences the consumer behaviour. The purchase behaviour in this case is determined by both the individual income and family income. Although family income is the income for the entire family, its impact is significant. The relationship between the family size and their requirement and size of family income determine the purchase decision.
iii. Expected Future Income:
If consumer expects a rise or fall in his income level in near future, his buying decisions are influenced. A chance of rise in income in future may force him to purchase more today and vice-versa.
iv. Availability of Consumer Credit:
A very important factor influencing consumer behaviour is the availability of consumer credit in the market. Consumer credit is the facility provided by the market to postpone the payment of goods to a future date. This enables the buyer to buy today and pay tomorrow. Various types of consumer credit are- hire purchase system, instalment system, deferred payment, etc.
2. Personal Factors:
These are the factors which are peculiar to different people. They are personal factors and influence the consumer behaviour tremendously.
It includes:
i. Age of the Consumer:
One of the very important factors influencing the purchase pattern is age. As age changes the requirements also changes, that brings changes in consumer’s behaviour. The stage of life cycle of individual shows significant difference in his behaviour.
Babies and small children requires milk, toys, toffees, chocolates, balloons, etc. while young children and teenagers go for bicycle, scooters, laptops, fashionable cloths, etc. Likewise, old people depict separate pattern of purchase. The requirement of a male differs from female due to various psychological changes.
ii. Education and Occupation:
A person’s educational level and occupation has tremendous effect on his behaviour. An educated person is more inclined towards advertisement in rational manner. However, an uneducated person seems to be less influenced. Education changes the mind-set of the people. An educated person will certainly make expenditure on books, magazines, etc. but an uneducated person will show different purchase pattern.
The occupational structure of an individual determines his level of needs and the way of fulfilling them. Low, medium and high level people in organisation structure show different behaviour for purchase. While higher level executive will go for the best quality of goods, lower level employees have to compromise with the quality. Corporate employees show different requirement patters than the academic people.
iii. Personality:
Every individual has different personality based on personality traits he possess. Different personality traits are friendliness, independence, aggressiveness, dominance, self- consciousness, competitive, etc. These traits build up one’s personality and then he has a unique way of responding when presented with a stimuli. Personality is also influenced by the life style of the person. Thus, consumer behaviour reflects an individual’s personality.
iv. Life Style:
Each individual has its own life style and that shapes his behaviour. The life style reflects a person’s thinking, mind-set and his other activities. At a time person plays numerous role e.g. a women at home may be a sister, a daughter or wife but outside in her organisation she is a principle. Thus, she is blending her various roles and that is reflected in her lifestyle.
The cultural background of an individual, his social class, etc. bears different life style. Life style is a manner in which an individual spends time and money in the area of his interest. It is a function of motivation, attitude and belief, learning, personality and such other factors. Life style may be used to understand the behaviour of consumer and develop marketing strategy.
3. Psychological Factors:
i. Motivation:
Motivation is the ‘Why’ of behaviour. It is a strong driving force which leads the individual to act in particular manner. Motivation refers to the drives and urges is an individual and depends upon his psychological and physiological mechanism. Our motives may be of different types like conscious or unconscious, positive or negative, rational or emotional. Our motive may be plain biological desire or they may relate to need for power, prestige, achievement, etc.
The first step in the direction of motivation was explained by Abraham Maslow in his Need Hierarchy Theory. He listed out five levels of need in a person- Basic needs, safety needs, social needs, esteem needs and self-actualisation need. As one need is fulfilled, consumer moves on to the next. For a marketer it is thus, essential that he understands the motives that drive a person to make a particular purchase.
ii. Perception:
Perception is a psychological factor. It is a process whereby a person receives a stimuli, interprets it and translate it into action/response. Each person receives message through his sense organ viz. eyes, ears, skin, nose and mouth. The way or the manner in which his mind receives, organises and interprets various stimuli is his perception.
Depending upon his needs, values and expectations, each individual recognise, selects and interprets these stimuli. Perception is selective in nature. People actually perceive what they want to perceive and what actually is there. Though we receive various stimuli we only recognise relevant stimuli and ignore rest of them.
iii. Learning:
Learning means the change in behaviour as a result of past experience. It is a process of acquiring knowledge. Consumer behaviour is affected by the learning experience of buyers. Learning has four components – Drive, Cue, Response and Reinforcement. Drive is an internal stimuli that warrants an action. Examples of drive are fear, pride, thirst, rivalry, etc. Cue is an environmental stimulus that will decide the nature of response to a drive. Example – advertisement in newspaper and magazines, display of goods, etc.
Responses are individual’s reaction to the drive and cue. For example – a thirsty person can satisfy his thirst by visiting a particular shop for the drink which he has seen in the advertisement on the roadside poster. Reinforcement is the response reward.
The drink may quench the thirst of the individual. Once this is done, people learn to act in a certain way. Reward strengthens the link between stimulus and response. Consumer behaviour is mainly learnt behaviour, and therefore it has a deep impact on the consumer buying process.
iv. Attitude:
Attitude may be defined as a predisposition of a person to act or react in a certain manner towards an object or stimulus. It is a predisposition to behave in a certain way. This attitude can be favourable or unfavourable, positive or negative. Attitude depends upon the learning process and develops gradually as a result of experience.
Attitude has three important components:
a. Cognitive Component is the information part of attitude. Cognitive means what an individual believes about something based on the information he has about it.
b. Affective Component deals with the feeling or emotional reactions of the people.
c. Behavioural Component means the tendency to act or behave in a particular manner.
Attitude is very useful device to predict the consumer behaviour. A favourable attitude of consumer towards a product increases its usage and vice-versa. It is important for the marketer to study the attitude because attitudes are hard to change; and a marketer should accordingly plan and produce the goods.
4. Social Factors:
i. Family:
Most of the decisions made by consumer are influenced by his family. It is the family which shapes the pattern of consumption and decision making power. The different members of the family play different role in decision making like Influencer i.e. a person who influences the buying decision; Initiator, who initiates the process after sensing a need for the purchase of the product; Decider, who takes the final decision to buy or not to buy and User, who uses the purchase. In families which may be nuclear family or joint family, different family member are involved in decision making. A marketer is therefore required to identify different members and their respective buying roles.
ii. Reference Group:
Reference group are those groups with whom an individual identifies himself to a large extent. These groups become a standard in influencing his behaviour. Reference group is a social and professional group that influences an individual’s beliefs and provide him a sense of identity. Most of the consumers rely on these reference groups at the time of taking purchase decisions.
These reference groups provide word of mouth communication which influences the consumer’s decision, as it is more powerful than formal advertisement. There may be groups which have a direct influence on the buying decisions. They are direct reference groups while those with whom an individual does not have any direct contact are indirect reference group.
iii. Opinion Leaders:
Like references group opinion leaders also play an important role in influencing consumer behaviour. When people get influenced by a person or an individual rather than a group in their buying decision, these people are called opinion leaders. The beliefs, preference, attitude and action of these opinion leaders set a trend for other people.
This is because these opinion leaders are well read and informed in a particular area, and have higher status in society, than other people. Marketers try to catch these opinion leaders to influence and sell their products, so that it is followed by other people as well.
iv. Role and Status:
An individual has different roles and status in the group to which he belongs. At different points of time, he plays different roles. At office, people have a formal role while at home they have informal role.
In a family, a person may play a role of a husband and father and outside he may be a senior executive. Each role influences his behaviour at the time of purchase. Each role carries a status. People prefer those products which match with their role and status in the society.
5. Cultural Factors:
i. Culture:
Culture is defined as the society’s way of living. It has considerable influence on the life style and consumption pattern of an individual. Culture is the learned behaviour of an individual from his environment; which is not static. Much of the behaviour of an individual is determined by culture. Culture is group behaviour of the society; it is a form of adaptation to the environment by the society as a whole. This culture of an individual affects his purchase decision. It affects his wants and thus his behaviour.
ii. Sub-Culture:
There exist a number of sub-cultures within the broader culture. These sub-cultures may be on the basis of nationality, religion, race, age, sex, social class, geographical location etc. Each sub-culture has distinct identification. They have their own beliefs, values and customs which are different from other members of the other sub-culture. For example – on the basis of occupation, there may be doctors, lawyers, teachers etc. on the basis of age there may be children, young-aged, older, on the basis of sex there may be male and female.
iii. Social Class:
Consumer’s behaviour is influenced by social class to which he belongs. Most of the societies shows some kind of stratification, which is referred as a class. This stratification is on different basis like authority, ownership of property, income level, education, public service, religion, race, life style etc. Different societies have different attitudes and values which have a direct influence on the consumer behaviour.
Major social class as given by Prof. Philip Kotler are grouped into six categories:
a. Upper Uppers
b. Lower Uppers
c. Upper Middles
d. Lower Middles
e. Upper Lowers
f. Lower Lower
Answer 3. Factors Influencing Consumer Buying Behaviour:
Part of the process of understanding consumer buyer behaviour involves appreciating the context in which consumers make their purchase decisions. Pervasive social influences can be viewed on two levels- the macro level and the micro level. Macro influences embrace culture, subculture and social class, while micro influences comprise the consumer’s more immediate social environment of reference groups and family.
Macro Social Influences:
Macro social factors play a role in shaping the values, beliefs, attitudes and behaviours of individual consumers, and provide useful bases upon which to segment markets. They have direct implications for designing effective RM strategies, especially where management of the marketing mix spans national boundaries.
The annals of international marketing contain numerous examples of companies, many of them respected brand owners, who have failed to manage their product/service portfolios successfully because their marketing efforts have neglected to take into account the respective cultures concerned. For example, General Motors’ marketing of the Nova car in Spain was destined to bring disappointment, for ‘nova’ literally means ‘won’t go’ in Spanish.
As Simon Anholt, founder of World Writers, put it at a Marketing Society event in October 1997-Culture is the things that people think, it is the things they believe in, it is the things that motivate them, and it is the things that make them what they are. Language is just the way they say it, and if you get the culture right, then the language is sure to follow.
Culture can be defined broadly as ‘a complex of learned meanings, values and behavioral patterns’ that is shared by a society. The relationship between the consumer and the product, often described as the ‘product/self-relationship’, is culturally specific and thus of great interest to marketers seeking to identify the factors which influence purchasing and consumption. As the saying goes, the devil is in the detail.
Consider the Christmas holiday. It appears on the calendars of many countries, yet differences occur in the minutiae of each celebration. For example, the manufacturer of a major chocolate brand was caught out in the first year of trying to manage a pan-European Christmas marketing campaign because it failed to appreciate that Christmas is celebrated differently across the continent.
In Holland, Sinterklaas visits on 6 December, while in the UK; Father Christmas arrives on 24/25 December. Epiphany in Greece and Russia is celebrated as the annual main event in early January.
Eurodisney also experienced a number of teething problems when it first opened outside Paris in 1992. Research revealed, among other things, that while Americans prefer ‘grazing’ (or snacking) all day as they tour the theme park, Europeans want a full meal between 12 noon and 2 p.m. Not recognizing this difference in eating patterns, park caterers were faced with big unexpected queues for food in the early afternoons.
To redress this situation, the company had to create more suitable eating opportunities for visitors. In addition, the two main daily parades of Disney characters had to be rescheduled for 11.30 a.m. and 4 p.m. so as not to clash with the luncheon period.
Cultural influences play as important a role in domestic markets as they do in international markets. However, because marketers operating within their home countries tend to be very familiar with the prevailing culture, they may find it harder to recognize the significant cultural factors that influence domestic buyer behaviour.
A subculture is a cultural group within a larger culture that has beliefs or interests that are at variance with those of the larger culture. Many types of distinction are used to classify subcultures, including ethnicity, religious or political affiliation, age, and so forth.
Taking age as an example, marketers often distinguish categories of consumer in terms of their age group. People within certain age ranges frequently behave similarly, but in ways which set them apart from other consumers. The youth market, for instance, is described in terms of life stage characteristics.
Young people are noted for their willingness to experiment with new identities. They exhibit a tendency to seek peer approval constantly, to be preoccupied with sex and to find conflict with their parents. In terms of lifestyle, today’s teenagers are the first computer literate generation. They are comparatively well-travelled, possess unprecedented assertiveness, and are concerned with world issues and global perspectives.
Young people currently have the highest earning power ever recorded for their age group, and outward manifestations of their subculture, such as accessories of music and apparel, are exceedingly important to them. These easily identified and insatiable consumers represent every marketer’s dream!
Interestingly, youth subculture is not restricted to the UK’s 3.5 million strong membership, for it is found in countries across the world. Teenagers comprise the most global market of all. Their tastes, language and attitudes are converging and, as consumers, they purchase a relatively common portfolio of products. The teenager’s bedroom is often ‘a universal shrine’ to pet products and icons, most of which are American in origin.
The number of consumers in this market is staggering, totaling 57 million in Mexico, Brazil and Argentina; 42 million in Japan, Korea, Singapore and Vietnam; 28 million in the USA; and 50 million in Europe. It is obvious that the opportunities for marketers with the right products and the right approaches to marketing them are immense.
The concept of social class is drawn from sociology, where a social group is organized according to a recognized hierarchy based on the individual’s status within the group. While the impact that social class has on consumer behaviour is a topic of some debate, marketers favour social class as a form of shorthand to describe their typical consumers.
In the UK, consumers have traditionally been classified into six social classes as determined by the occupation of the head of the household, and this is given in Table 4.1. This method of classification has remained in use for a number of years, despite unease at its decreasing relevance to current society.
These systems of consumer classification tend to be culturally bound, having been developed on a parochial basis. They do not lend themselves to international comparison. Within Europe, there have been attempts to use a harmonized set of demographics, which focus on the terminal education age of the main income earner in the household, their professional status, and the average net monthly level of household income.
However, collecting this kind of data from across European markets can prove problematic in countries such as the UK, where it is common practice for survey respondents to think in terms of their gross annual salary, rather than the net monthly income of their household. The issues surrounding the difficulties of market research are mentioned here to illustrate the importance of aligning a classification scheme to the prevailing culture.
The need to find a more appropriate method of defining social class in the UK has been the driving force behind the recent unveiling of a revised classification scheme by the UK government.
Micro Influences:
Purchasing decisions are also influenced at the micro level by the people closest to the consumer, namely family, friends, extended relatives and peers. These people feature significantly in the consumer’s immediate social environment and can be grouped into two types of influences reference groups and family. Their effect on consumers’ attitudes and purchasing behaviour can be considerable.
Reference groups are made up of people who share the consumer’s social circumstances and who are personally relevant to the consumer- they influence the way that the consumer thinks, feels and behaves in respect to choosing between different products and services. Classic examples of reference groups are school or college friends and peers.
The fixation of young people to own certain brands of footwear, for example, is highly likely to be driven by the desire to conform to the norm for their peer group.
Some companies use reference groups explicitly in their marketing activities. For example, companies such as Tupperware that use in-home selling techniques actively encourage reference groups to exercise their power in the purchasing decision.
It is also common practice for health and fitness clubs to build their client registers through special promotions where current members are encouraged to recommend or recruit new members. In this case, reference group endorsement is used to market the clubs’ facilities.
Market research traditionally uses the individual consumer as the unit of analysis, but there are types of purchasing decision where the family becomes the decision-making unit. Studies into this phenomenon attempt to describe the various roles played by family members and the complexity of interactions that take place in reaching a collective decision.
For example, the choice of restaurant for a family’s meal out may well be influenced by the children within the family whose motivation may stem from the appeal of a promotional offer. McDonald’s, for instance, is one of the largest toy retailers in the world, tying in promotional give-away with the release of blockbuster Disney movies.
In fact, it is estimated that, in the USA, children prompt purchases amounting to a staggering $260 billion per annum. This power exerted by children in the market place, directly through the purchases made by immediate family members and indirectly through gifts received from wider family and friends, is technically known as ‘pester power’.
In seeking to understand the dynamics of the family decision-making unit, two issues are key- demographic changes in ‘the family’ and the family life cycle. Family statistics are altering in response to changes in the composition of the household and the nature of child rearing, increased female employment, and lower birth rates.
This has necessitated a move away from the traditional picture of the family unit that of two married parents where the mother is at home bringing up the children and father is out at work. These demographic trends have profound implications for marketers, who face the increasing challenge of identifying and satisfying families’ needs without having any firm idea of what the ‘family’ is.
Present trends indicate that families will continue to be smaller, more affluent, and more geographically mobile. Children today enjoy the highest ever level of material goods and this record is set to continue, presenting tremendous scope for youth-oriented brands. Additionally, opportunities are opening up as people become increasingly willing to pay for services that maximize their use of time- for example, the home delivery of groceries, after- school clubs for children, and so on.
A popular tool for analyzing family purchasing behaviour is the family life cycle, which describes the typical changes that take place in the family unit over a period of time. Traditionally, the family life cycle has concentrated on life stage events such as marriage and the arrival of children, and schooling and the departure of children (often referred to as the ‘full nest’ and ’empty nest’ life stages).
However, given the evident changes in demographics, the family life cycle is no longer a straightforward linear model, but something resembling a complex network of life patterns that may be connected by tangent, non- traditional or repeated life stages.
The traditional family life cycle is:
It is crucial that marketers are able to recognize changes at each of these life stages in order that they can re-evaluate the positioning of existing products and services, and identify opportunities for new products and services. For example, the marketing of ‘white goods’ is generally targeted at young couples who are likely to require domestic appliances in setting up a home together.
Influencing factors that have a more direct impact on consumer behaviour are those concerned with the individuals themselves. They include personal attributes, such as age, stage of life, occupation, economic circumstance, lifestyle, personality type, and psychological forces in respect of beliefs, attitudes and motivations.
For example, the same individual may display distinctly different buyer behaviour when purchasing a bottle of wine for home consumption as compared to as a gift for a dinner party. Equally, consumers may display a completely different set of purchase motivations and preferences when faced with a so-called ‘distress purchase’, such as buying petrol when the petrol gauge in the car hits zero as compared to simply topping up a half-full tank.
Market research data on consumer buyer characteristics can be presented to marketers in the form of a typology of buyers for a particular set of products or services. These consumer profiles, with their memorable labels such as ‘sporting thirties’ and ‘young survivors’, can be quickly assimilated into marketing strategies. They offer an abbreviated method of expressing a complex set of consumer characteristics and typical buyer behaviours.
Answer 4. Factors Influencing Consumer Buying Behaviour:
At a particular point of time, consumer has many needs. It may be biogenic such as hunger, thirst, etc. or/and psychogenic, such as need for recognition, esteem or belongingness. Consumer looks for products/services that can satisfy his needs.
A need becomes motives when it is sufficiently pressing to drive the consumer to purchase product/service. A motivated consumer is ready to act. How a motivated consumer purchase product/service is influenced by his perception about the buying situation.
A buying situation consists of marketing stimuli such as product, price, place and promotion offered by the marketers, surrounding environments consisting of Micro and macro environments and the individual consumer’s personality or self-concept.
Consumer’s perception about a particular product/service as good enough to satisfy his need depends not only on the marketing stimuli but also on the stimuli’s relation to surrounding and on the personality and self-concept of the individual consumer.
When he acts or purchases the product, he learns about the product. This leads to the consumer’s belief about the product and consequently forms favourable or unfavourable attitudes towards the product. As a result consumer will behave consistently towards the similar product. Next time when he feels the same need he will buy the product towards which he has favourable attitude.
So understanding of the consumer behaviour requires the internalization of the basic determinants that influence the consumer behaviour.
The major factors that influence the consumer behaviour are:
a) The macro and the micro environmental factors, the external factors which indirectly influence the consumer behaviour.
b) Individual factors which directly influence the consumer.
Macro Environmental Factors:
The general socio-economic conditions of the country referred to as macro environment indirectly influence the consumers.
For example, in 1991, Indian economy integrated with the economies of the world. Now there is no restriction (like quotas, licenses, high tariff, and administrative barrier) on the amount of product or factors that are exported or imported.
The proportion of import and export both in GNP for the year 1999-2001 is over 22%. Whereas prior to liberalization was 16% only in the year 1990-91.
As a result of liberalisation, Indian economy has benefited in manifold. It has improved the efficiency of the industry by resorting to the principle of “competitive advantage”. It has increased the supplies of finance needed for growth and industrialization of a country. It has also enabled the domestic industries to reach to the international market.
To the general public, it has benefited in terms of availability of job opportunities and increase in salary. Thus, the disposable income of the people also has been increased. Consumers have benefited in terms of availability of the different brands including foreign brand of a product which they want to purchase. Now, they have a better option for the money they want to spend on the product.
Micro Environmental Factors:
Some of the factors which come under this category are:
1. Culture
2. Sub-culture
3. Social class
4. Social group
5. Family influence
6. Personal influence
7. Others.
1. Culture:
Culture has been defined as “the sum total of learned beliefs, values, and customs that serves to direct the consumer behaviour of members of a particular society”.
The consumer behaviour that is the thing they buy is influenced by the consumers’ background or culture. Different emphasis is given by different cultures for buying, use, and disposing of products. People in the southern India have a certain style of consumption of food, clothing, saving etc.
They differ from the people in the Northern India. A child growing up in the United States of America is exposed to the following culture and values; achievement and success, activity, efficiency, and productivity, progress, material comfort, individualism, freedom, external comfort, humanitarian and youthfullness. Consumers belonging to different culture behave differently. Therefore, in consumer behaviour culture plays a very important part.
2. Sub-Culture:
Leon G. Schiffinan and Leslie Lazar Kanuk have defined sub-culture as a distinct cultural group that exists as an identifiable segment within a larger, more complex society. Within a culture there are many groups or segments of people with distinct customs, traditions and behaviour.
In the Indian culture itself, there are many sub-cultures, the culture of the south, the north, east and the west, Hindu culture, Muslim culture. Hindus of the south differ in culture from the Hindus of the north. Products are designed to suit a target group of customers which have similar cultural backgrounds and are homogenous in many respects.
3. Social Class:
Social class is defined as the division of members of a society into a hierarchy of distinct status classes in such a manner that members of each class have relatively the same status and members of all other classes have either more or less status. Social class is defined by parameter like income, education, occupation, etc.
Within a social class, people share the same value and beliefs and tend to purchase similar kinds of products. Their choice of residence, type of laundry, entertainment, leisure all seems to be alike. The knowledge of social class and their customer behaviour is of great value to a marketer.
A group is a collection of individuals who share some consumer relationship, attitude, and have the same interest. Such groups are prevalent in societies. These groups could be primary where interaction takes place frequently and consists of family groups. These groups have a lot of interaction amongst them and are well-knit.
Secondary groups are a collection of individuals where relationship is more formal and less personal in nature. These could be political groups, walk groups, and study groups, service organisation like the Lions, Rotary etc. The behaviour of a group is influenced by other members of the group.
An individual can be a member of various groups and can have varied influences by different members of groups in his consumption behaviour. An individual can be an executive in a company; can be a member of a political party. He may be a member of service organisation and of entertainment clubs and study circles. These exert different influences on his consumption.
The family is the most important of primary group and is the strongest source of influence on consumer behaviour. The family tradition and customs are learnt by children and they imbibe many behavioural patterns from their family members, both consciously and unconsciously.
These behaviour patterns become a part of children’s lives. In a joint family many decision are jointly made which also leave an impression on the members of the family. These days the structure of the family is changing and people also going in more for nucleus families which consists of parent and dependent children. The other type of family is the joint family where mother, father, grandparents, and relatives are also living together.
A buyer’s decision is also influenced by personal characteristics. This includes the buyer’s age and stage in the life cycle, occupation, economic circumstances.
Age and Stage in the Life Cycle:
People buy different goods and service over a life time. They eat baby food in the early years, most foods in the growing and mature years and special diets in the later years. Taste in clothes, furniture and a recreation is also age related consumption and is shaped by the family life cycle.
Nine stages of the family life cycle as listed by Philip Kotler are given below:
i. Bachelor stage-Young, single and not living at home.
ii. Newly married couples-young and no children.
iii. Full nest I- youngest child under six
iv. Full nest II- youngest child six or over.
v. Full nest III-older married couple with dependent children
vi. Empty nest I-older married couple, no children living with them, heads of the household in labour force.
vii. Empty nest II-older married, no children living at home, head of household retired.
viii. Solitary survivor in labour force
ix. Solitary survivor, retired.
Marketers often choose life cycle groups in their target market.
Occupation and the Economic Circumstance:
Occupation also influences a person’s consumption pattern. A blue-collar worker will buy work clothes, work shoes and lunch boxes. A company president will buy expensive suits, air travel, country club, membership and large sailboat. Marketers try to identify the occupational groups that have above average interest in their products and services. A company can even specialise its product for certain occupational groups.
Product choice is greatly affected by economic circumstances; spendable income savings and assets, debts, borrowing power, and attitude towards spending versus saving.
Marketers of income sensitive goods pay constant attention to trends in personal income, saving and interest rates. If economic indicators point to a recession, marketers can take step to redesign, reposition and re-price their product. So they continue to offer value to target customers.
7. Other Influences:
Martin Khan reasons that consumers are also influenced by national or regional events which would be like the Asiad, the Olympics, Cricket test matches, World cup, the war or the calamity. These have permanent or temporary impression on the mind of the consumer and affect his behaviour.
In these events, products are advertised and sometimes the use of a product like drugs etc. is discouraged. People are urged to adopt family planning methods. Situations variables such as product display, price reduction, free gifts, and attractive offers also influence consumer behaviour.
Individual Factors:
A person buying choice is influenced by five major psychological factors – motivation, perception, learning, belief and attitude and personal and self-concept.
1. Motivation:
A person has many needs at any given time. Some needs are biogenic; they arise from physiological states of tension such as hunger, thirst, discomfort. Other needs are psychogenic; they arise from psychological states of tension such as the need of recognition, esteem and belonging. And need becomes a motive when it is arose to a sufficient level of intensity.
A motive is a need that is sufficiently pressing to drive the person to act. Psychologists have developed theories of human motivation; three of the best known – the theories of Sigmund Freud, Abraham Maslow, and Frederick Herzberg—carry quite different implications for consumer analysis and strategy.
2. Perception:
A motivated person is ready to act. How the motivated person actually acts is influenced by his or her perception of the situation. “Perception is the process by which an individual selects, organizes, and interprets information inputs to create a meaningful picture of the world”. Perception depends not only on the physical stimuli but also on the stimuli’s relation to the surrounding field and on conditions within the individuals.
The key word in the definition of perception is individual one person might perceive a fast talking salesperson as aggressive and insincere; another as intelligent and hopeful. People can emerge with different perceptions of the same object because of three perceptual process; selective attention, selective distortion and selective retention.
3. Learning:
When people act, they learn. Learning involves changes in an individual’s behaviour arising from experience. Most human behaviour is learned. Learning theorist believe that learning is produced through interplay of desires, stimuli, cues, responses, and reinforcement.
4. Belief and Attitude:
Through doing and learning people acquire belief and attitude. These in turn influence buying behaviour.
“A belief is a descriptive thought that a person holds about something”.
Belief may be based on knowledge, opinion or faith. They may or may not carry an emotional charge. Of course, manufactures are very interested in the beliefs people carry in their heads about their products and services.
These beliefs make up product or brand images and people act on their images. If some beliefs are wrong and inhabit purchase, the manufacture will want to launch a campaign to correct these beliefs.
“An attitude is a person’s enduring favourable or unfavourable evaluation, emotional, feelings, and action tendencies towards some object or idea”.
People have attitudes towards almost everything— religion, politics, clothes, music, food, etc. Attitudes put them into a frame of mind of liking or disliking an object, moving towards or away from it. Attitude leads people to behave a fairly consistent way towards similar objects. People do not have to interpret and react to every object in a fresh way.
Because attitude economise on energy and thought, they are very difficult to change. A person’s attitudes settle into consistent pattern. To change a simple attitude may require major adjustments in other attitudes. Thus a company would be well advised to fit its product into existing attitudes rather than to try to change people’s attitudes. Of course, there is exception where the cost of trying to change attitude might payoff.
5. Personality of Self Concept:
Each person has a distinct personality that influence buying behaviour. By personality we mean distinguishing psychological characteristics that lead to relatively consistent and enduring responses to environment.
Keren Horney proposed that individual can be classified into three personality groups- Compliant, Aggressive and Detached:
1. Compliant individuals are those who move towards other. They desire to be loved, wanted and appreciated.
2. Aggressive individuals are those who move against other. They desire to excel and win admiration.
3. Detached individuals are those who move away from others. They desire independence, self-reliance, self- sufficiency, and freedom from obligation.
Personality can be useful variable in analyzing consumer behaviour provided that personality type can be classified accurately and that strong correlations exist between certain personality types and product or brand choices.
For example, a computer company might discover that many prospects show high self-confidence, dominance, and autonomy. This suggests designing computer advertisements to appeal to these traits. Related to personality is self-concept or a self-image. Marketers try to develop the brand images that match the target markets self-image.
It is possible that a person’s actual self concept i.e. how she views herself differ from her ideal self concept i.e. how she would like to view herself and from her others self-concept i.e. how she thinks other see her. Which self will she try to satisfy in making a purchase? Because it is very difficult to answer this question, self-concept theory has had a mixed record of success in predicting consumer responses to brand image.