When you walk into a store, you are surrounded by different products. As you traipse down the aisle, you make thousands of tiny decisions. You purchase some items and pass on others. Sometimes you stick to your list, and other times you don’t.
Do you ever wonder what’s behind your consumer buying decisions?
As customers, we are constantly evaluating our options. There are tons of psychological, social, economic, cultural, and cognitive factors that cause us to choose (or not choose) to buy something. Knowing what some of these factors are will make you a savvy consumer.
As a business, this knowledge is even more helpful! With it, you can understand why customers do what they do. We’ve said it before and we’ll say it again – understanding consumer behavior is critical to success!
The Consumer Decision Making Process
Before you can understand the different factors that sway consumer behavior, you need to understand how consumers make decisions in the first place. The decision-making process varies from person to person but tends to involve five distinct stages.
First, the consumer recognizes that they have a need. In marketing, needs are not always what you may expect them to be. We will now borrow a passage from one of our older posts to expand upon that point.
In first world countries, the people who have the disposable income to buy your products or services largely have their basic needs met. If you’ve taken a basic psychology course, you may be familiar with Maslow’s Hierarchy of Needs, posted below. Once basic needs are met, your mind – looking for a problem to solve – turns toward more abstract needs.
You have food and enough money to get by, so now it’s time to find love. You have a wife, so now it’s time to achieve something worthwhile. You’re an achiever, so now it’s time to really push yourself to your creative limits.
To a small business marketer who is studying consumer behavior, this is a really valuable framework. When you’re creating products, you want to address a specific need your customers have, in a way they would like for it to be addressed. Those of us with the great fortune of living in the USA, the UK, Western Europe, and other wealthy countries often spend our days chasing abstract needs (or, really, wants). Marketers need to remember this!Consumer Behavior 101: People are Weird, Markets are Weirder
The information search
Next, the consumer does some research. They read websites online, or perhaps check the newspaper. They talk to friends, family, and coworkers. Sometimes they see advertisements. In this stage, consumers get a sense of what products or services may address their need.
Evaluation of alternatives
At this point, once the consumer has done some initial research, they weigh the pros and cons of different options. This can happen quickly or slowly, consciously or unconsciously. You may choose one brand of toothpaste over another for no deeper reason than because the packaging is prettier and catches your eye. On the other extreme, you may spend months choosing the right car to drive.
After identifying their need or needs, gathering information, and considering alternatives, the consumer makes a decision to purchase.
After their purchase, the consumer asks themselves whether their purchase was a good one. They may experience joy or relief, or alternatively, buyer’s remorse. What happens here determines whether or not they will make a similar purchase in the future.
35 Factors That Influence Consumer Buying Decisions
With the consumer decision-making process all spelled out, you can imagine there are a variety of different factors which can change how consumers make decisions. Some are individual, psychological, cultural, or social. Others are the result of errors in judgment, which we will refer to later as “cognitive biases.”
Some of these factors are ones that you – as a business owner and marketer – can influence directly. Others, you cannot, and you can only use this information to decide how to respond to common objections. Either way, you need to understand what is happening in consumers’ minds when they are making decisions. This will help you to more effectively sell your products or services!
Individual Factors that Influence Consumer Buying Decisions
Every person is unique and their needs are therefore different. There are a number of different factors unique to individuals which sway their decision-making process when it comes to making purchasing decisions. We’re going to talk about five big ones.
People often define themselves in terms of their job or career. Occupations affect the amount of time that people have to spend throughout the day, and that can skew their preference for convenience vs. cost savings. Executives will tend to lean toward the former with part-time workers leaning toward the latter.
What’s more, occupation can affect what people need to get through their daily life. Executives will need professional clothing. College students, for the most part, won’t.
Age impacts a lot of different purchasing decisions. Teenagers don’t buy houses and they don’t (or at least shouldn’t) buy beer. Likewise, people in their mid-40s are a lot less likely to spend money going out to clubs or buying flashy clothing, mid-life crises excepted.
3. Economic status
People with a lot of money can spend a lot of money. People without a lot of money cannot spend a lot of money. This is incredibly obvious but still has an outsized impact on what people are willing to purchase.
Quoting directly from Management Study Guide: “[l]ifestyle…refers to the way an individual stays in the society. It is really important for some people to wear branded clothes whereas some individuals are really not brand conscious. An individual staying in a posh locality needs to maintain his status and image. An individual’s lifestyle is something to do with his style, attitude, perception, his social relations and immediate surroundings.”
Everybody has different likes and dislikes. Often, they are so deeply ingrained into us, that we can’t explain why we like or dislike something! Don’t underestimate the importance of personal preferences in purchasing decisions.
Psychological Factors that Influence Consumer Buying Decisions
Consumer buying decisions are also influenced by hidden factors that consumers themselves may not even be aware of. We can think of these as psychological factors.
The consumer decision-making process is ultimately based on the drive to meet a certain need. This is the essence of the consumer’s motivation. Are they seeking safety or comfort? Are they seeking stimulation or recognition?
Branding goes a long way toward influencing what people think of products, services, and the companies that provide them. Luxury is, for better or worse, a made-up concept. It’s largely determined by how a company chooses to present itself.
In the consumer’s mind, Apple products may be seen as more luxurious than Android products. A Lexus ES300, despite being functionally identical to a Toyota Avalon, can command a higher price because of perception.
Every consumer has a different background, meaning they have different knowledge and skills. Each consumer will take their own individual life learning and apply it to the consumer buying process.
9. Attitudes and beliefs
Similarly, every consumer has different attitudes and beliefs that influence what they think about particular products. Usually, overcoming attitudes and beliefs is very difficult, but it can be done. For example, Old Spice had a reputation for being an old man’s deodorant in the early 2010s, until they launched a very successful viral marketing campaign that changed young people’s beliefs about the brand.
10. Prior experience
If your brand is big enough, there is a chance that individuals you meet will already have had an experience with your brand. Whether that experience was a good one or a bad one will swing their decision-making process.
Cultural Factors that Influence Consumer Buying Decisions
Individual and psychological factors imply that the consumer decision-making process is highly individualized. This is not the case, however. People are intrinsically social, and their behaviors are informed heavily by the culture in which they were raised.
Depending on where you grew up, you will pick up certain beliefs, customs, and rituals. You do this because people around you are doing the same and you learn from them. These vary from region to region. Just look at the difference in McDonald’s menus in different countries.
Cultures can be broken down into ever smaller pieces. People in Los Angeles have a different life than people in rural California. Taking it one step further, people in Beverly Hills have a different lifestyle than people in Anaheim.
As you look deeper at individual cultures, you find an enormous variation in people who you would think have a lot in common. Want to see a good example of subcultures that is easy to get your head around? Watch the Breakfast Club.
13. Social class
Whether you are working class, middle class, or wealthy will determine the way you live your life. Consumers who fall into these social class categories will exhibit different behaviors. The working class will try to satisfy basic needs and save a lot of money. The wealthy, meanwhile, don’t care as much about money but rather often make purchases to save them time.
People’s religious beliefs also influence their purchasing decisions. Once more, Management Study Guide provides a great example.
A Hindu bride wears red, maroon or a bright colour lehanga or saree whereas a Christian bride wears a white gown on her wedding day. It is against Hindu culture to wear white on auspicious occasions. Muslims on the other hand prefer to wear green on important occasions.
For Hindus eating beef is considered to be a sin whereas Muslims and Christians absolutely relish the same. Eating pork is against Muslim religion while Hindus do not mind eating it.Cultural Factors affecting Consumer Behavior, Management Study Guide
Social Factors that Influence Consumer Buying Decisions
Consumer buying decisions are often affected by deeply personal factors (individual and psychological). They are also affected by the basic social context in which we live: cultural factors. Even still, there are often more explicit social factors that affect how consumers make decisions too.
Children tend to pick up buying behaviors from their parents and siblings. This comes from sharing personality traits by genes and also from learned behavior. If you’ve ever seen a newly wealthy person saving mustard packets from a fast-food restaurant, it’s likely that they picked up the habit from their working-class family.
16. Reference groups
A reference group is a group of people that you would like to be associated with. Often people buy items in order to become part of a group. For example, a newly graduated law student may choose to buy a fancy suit so that they can fit in with high-powered lawyers in their firm.
17. Decision-making roles
Decision-making styles are often influenced by the role a person has in a purchasing process. We’ll quote from a previous post on this one.
In this research paper written by John R. Rossiter and Larry Percy in 1985, Rossiter and Percy posit that there are five roles that go into consumer decisions. In the decision-making process, you can be one or more of the following:
1. You could be the initiator, or the person who suggests a brand or product. I could say “have you thought about T-Mobile lately?” That’s neither a positive nor negative statement, but simply one that mentions T-Mobile.
2. Instead, you may be the influencer, a person who recommends a brand or product. If your friend said to you, “hey, you should really check out this great blog called Marketing is the Product,” they are the influencer. They are also a great friend.
3. The decider is the one who chooses to make the purchase. If a teenager says to their dad, “I really want the new Samsung phone – can I buy it?” Then the dad is the decision maker.
4. The one holding the wallet is the purchaser. If the teenager then goes to the nearest Best Buy and buys the phone, he or she is the purchaser.
5. Lastly, the user is the one ultimately using the product. Your company decides which computers to buy, the purchaser places the order, and you are the user.I Choose You: How Consumer Decisions Work in Small Business
For better or worse, people are not rational thinkers. Sometimes this can be good. Making decisions on sloppy heuristics allows us to do what we need to do without being paralyzed by continual analysis of all possible outcomes.
Of course, relying on heuristics to make decisions can have some comically bad effects sometimes.
A cognitive bias is a systematic error in thinking that affects the decisions and judgments that people make. There are a lot of cognitive biases.
Wikipedia has a pretty thorough list here. Below, we’ll paraphrase and simplify their list. Each of these biases provides yet another way to influence your consumer behavior.
18. Selective factfinding
We like to find facts that support beliefs we already had to begin with. As you can imagine, that would lead to some pretty flawed reasoning.
19. Selective perception
On an even deeper level, we can see and hear things that already support our beliefs. That’s because deep down, we’re not even paying attention to evidence that doesn’t line up with our preexisting beliefs.
20. Premature termination of the search for evidence
This is exactly what it sounds like: you stop looking for evidence long before you ought to, meaning you are never exposed to critical information.
21. Conservative bias
This refers to a tendency to stick with thought patterns that have worked in the past but don’t apply to new situations.
22. Limited experience
Similar to the conservative bias, this implies either an unwillingness or inability to use information that falls outside of prior experiences when making decisions.
23. Wishful thinking
In selective perception, you see what you expect to see. With wishful thinking, you see what you want to see. Both can steer you wrong.
24. Recency bias
This happens when you consider recently discovered information more strongly than old information. The best way to counter this is by thinking in terms of Bayesian probability.
25. Repetition bias
People often tend to believe what they hear a lot. This is part of why propaganda works in an authoritarian regime. It’s also why people believe they need to drink eight glasses of water per day.
26. Anchoring bias
Anchoring happens when the first source of information you see on a subject overshadows all subsequent information. An example of this in the wild: a shirt is marked as 50% off a ridiculously inflated price.
This happens when your individual decision-making preferences are overridden by the desire to fit in with others who hold different beliefs.
28. Source credibility
If you don’t like a person or organization, you may ignore what they say, even if what they say is sound advice.
29. Incremental decision-making and escalating commitment
Think of this as being a “frog slowly boiled.” This happens when a company convinces you to try a free or cheap version of their product and then upsells you later.
Simply put, this means using different decision-making criteria in similar situations.
31. Attribution asymmetry
Direct quote from Wikipedia: “[w]e tend to attribute our success to our abilities and talents, but we attribute our failures to bad luck and external factors. We attribute other’s success to good luck and their failures to their mistakes.”
32. Role fulfillment
This is what happens when you make a decision based on what you think other people expect you to do.
33. Illusion of control
This entails making decisions based on a failure to account for uncertainty. Put bluntly, we know less than we think we do.
Exactly what it sounds like: imagining things as being simpler than they are, and allowing that to destroy an otherwise good decision-making process.
35. Ascription of causality
Often, people like to believe that A causes B when A just so happens to occur at the same time as B. In other words, “correlation does not imply causation.”
Thinking about the many factors that can influence consumer buying decisions will make you a much savvier marketer. Even simple decisions are made with an enormous amount of unspoken context. Taking time to put that context into words will allow you to market more effectively and meet people’s needs!