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economic factors affecting consumer behaviour

How you supply your goods, i.e., the distribution chain. Understanding these factors can help businesses ensure they're providing products at the right prices. These all factors jointly shape consumer behaviour. Cultural factors. For the same product, price, promotion, and distribution, their responses differ significantly. This affects whether or not a consumer is able to afford the higher price. It is undoubtedly an essential factor. Interest rate fluctuations affect consumer spending because when rates are high, consumers are less inclined to borrow money from the banks to purchase big-ticket items such as a house or a car. Cultural factors affecting consumer buying behaviour: Cultural factors have a significant impact on customer behavior.Culture is the most basic cause of a person’s wants and behavior. Growing up, children learn basic values, perception and wants from the family and other important groups. Ahmed, E.-K. (2012, November 1). Lifestyle. Psychological Factors Influencing Consumer Behavior, Social Factors Influencing Consumer Behavior, Cultural Factors Influencing Consumer Behavior, Personal Factors Influencing Consumer Behavior. 6. External issues could include economic situation and political environment. The reaction, as a consumer, of an 18-year-old teenager has nothing to do with that of a 68-year-old veteran. Such behavior is largely influenced by various factors. Required fields are marked *, Economic Factors Influencing Consumer Behavior. Economic determinants such as cost, income, availability 3. If the economy is strong, consumers have more purchasing power and money is pumped into the thriving economy. 4. Consumer Behaviour – Cultural factors. How Do Psychological Factors Play a Role in Consumer Behaviour? This relationship attracts more suppliers, serving to not only stabilize the prices but also to keep the demand at healthy consumer levels. Inflation directly affects the value of the dollar because when inflation goes up, the dollar's value goes down, and so does the consumer's purchasing power. how much an individual spends on the purchase of goods and services that contribute to the overall sales of the company. Personal factors can also affect the consumer behavior. From the early year, Peterson (1987) found that socialization which is determined the way of patterns of behaviour or the process by which the person can adopt social roles. This article focuses on four important demographic factors and the effect they have on consumer behavior. 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. In the big picture, the societal or socioeconomic landscape each consumer inhabits – ranging from the buying power of a country's currency to how purchases are taxed on a state level, for example – influence purchasing behavior, as do factors such as supply and demand and the overall material quality of life in any given region. 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. And like previous economic recessions, young people are going to be the hardest hit. Factor affecting Consumer Behavior. As the change comes in these factors, consumer behaviour also changes. 5. Age and Life Cycle: The activities of individuals and families vary over time. Consumer behavior is influenced by cultural factors … As we reach adulthood and enter into it, our life becomes more complex and with it our needs become more comple… Social determinants such as culture, family, peers and meal patterns 5. 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. Some personal (internal) factors include age, lifestyle, occupation, income, culture and personality. Your email address will not be published. During this time, home sales were also down because fewer people were able to afford a home mortgage. Understanding how to motivate your customer is a powerful tool. The success or failure of a nation's economy can greatly affect consumer behavior based on a variety of economic factors. Factors affecting consumer behavior of purchasing tobacco products . After the cultural factors in the study of consumer behaviour, the Social factors also affect the consumer behaviour. Personal Income: Income of a consumer is most important factor affecting the demand and subsequently the purchase decisions. As demand drives upward, so do the prices. COVID-19 is a health and economic crisis that has a sustainable impact on consumer attitudes, behaviors and purchasing habits. 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. Supply and demand affect consumer behavior because if a product is too expensive, consumer demand for that product will decrease. Unemployment affects consumer behavior because if a person is without a steady income, his purchasing power decreases considerably. Hence we can say that factors affecting consumer buying behaviour during E-Commerce are-: Customer Benefit includes-: Website design helps easy access of sit e, various brands comparabilit y Physical determinants such as access, education, skills (e.g. Business Dictionary: Law of Supply and Demand. There are four psychological factors that influence consumer behaviour: Motivation, perception, learning, and attitude or belief system. If the economy is struggling, the reverse is true. Economic man model is based on: Price effect: Lesser the price of the product, more will be the quantity purchased. Due to impact of various factors, consumers react or respond to marketing programme differently. … Some of the important personal factors that influence the buying behavior are: lifestyle, economic situation, occupation, age, personality and self concept. Social Factors affecting Consumer Behaviour Consumer Behaviour is an effort to study and understand the buying tendencies of consumers for their end use. Many factors, specificities and characteristics influence the individual in what he is and the consumer in his decision making process, shopping habits, purchasing behavior… The demographic factors which affect consumer behavior are: (1) age (2) sex (3) marital status (4) income (5) family background (6) education (7) occupation (8) family size (9) geographic factors (10) psychological factors. 10 Consumer Behavior Differences between developed and developing Countries. policies, etc. Age and family status … how much an individual spends on the purchase of goods and services that contribute to … Consumer behavior is affected by internal and external issues. An Analysis of Factors Affecting the Consumer's Attitude of Trust and their Impact on Internet Purchasing Behaviour. International Journal of Business and Social Science, 147-158. Supply. Your email address will not be published. The modern consumer is a construct of growing economic pressure and increasing competitive options. … Note: Apart from these factors other economic conditions such as inflation, recession, business cycles, etc. Motivation speaks to the internal needs of the consumer. Some of the other factors that influence food choice include: 1. The more the disposable personal income in hand the more is the expenditure on various items and vice-versa. Lifestyle, a term proposed by Austrian psychologist Alfred Adler in 1929, refers to the way … also influences the consumer buying behavior. ADVERTISEMENTS: Everything you need to know about the factors affecting consumer behavior. If the economy is strong, consumers have more purchasing power and money is pumped into the thriving economy. ... – Socio-economic status of the population (e.g., education, occupation, employment status) – Rural versus urban area of residence ... consumers to adjust that tobacco use behavior. At the moment we are born, our requirements are usually very basic (food, care, etc.). However, there are several factors affecting buying decisions and consumer behavior. A demand leads the person to make a purchasing decision, which is duly affected by the economic factors such as personal income, family income, consumer credit, govt. Stephanie Lee began writing in 2000 with concentration on food, travel, fashion and real estate. Some of these differences are easily noticeable whereas the others might be a little difficult to observe. The key driver for eating is of course hunger but what we choose to eat is not determined solely by physiological or nutritional needs. Understanding how consumer behavior impacts marketing renders it vital to understand those factors which affect consumer behavior and which include: Cultural Factors. ... and how factors such as economic situation and health status are driving changes in consumer behavior. The success or failure of a nation's economy can greatly affect consumer behavior based on a variety of economic factors. 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, A struggling economy affects factors such as employment and interest rates, and the people may lose consumer confidence. There are many factors affecting consumer behaviour. The needs are also different. Age and life-cycle have potential impact on the consumer buying behavior. Consumer spending is one of the most important driving forces for global economic growth. 2. An increase in inflation means an increase in prices. Family Income –Income of the family. Social factors play an essential role in influencing the buying decisions of consumers . In this model, consumers follow the principle of maximum utility based on the law of diminishing marginal utility. Suppliers. Economic Factors Influencing Consumer Behavior 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. Lower income families have less demand than prosperous families. Consumer behavior or purchases made by consumers are rarely unaffected. 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. 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. A group of people are associated with a set of values and ideologies that belong to … Demand. If the economy is struggling, the reverse is true. cooking) and time 4. Factors Influencing Consumer Behaviour: Consumer behaviour is affected by a number of factors. Market size. Interest rates determine a consumer's purchasing power. With regard to the latter, there is a curious phenomenon. Psychological factors also play a pivotal role in consumer behavior. The law of supply and demand demonstrates the relationship between supply, demand and prices. Economic model of Consumer Behaviour. Age. She has written for Amnesty International and maintains three blogs. Following the 2008 financial crisis, young people were burdened with debt, high unemployment and … 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. The economic factors that most affect the demand for consumer goods are employment, wages, prices/inflation, interest rates, and consumer confidence. Below are some microeconomic factors that may influence a business: 1. The consumer wants to spend the minimum amount for maximizing his gains. According to Trading Economics, the unemployment rate in the United States between October 2009 and December 2009 was the highest it has been since the record high of 10.80 percent in November 1982. Copyright 2020 Leaf Group Ltd. / Leaf Group Media, All Rights Reserved. 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. Lee holds a Bachelor of Arts in international relations from the University of California, Irvine, and an M.B.A. from Concordia University. Competitors. Biological determinants such as hunger, appetite, and taste 2. CPG companies can adapt to these changes by taking action to respond, reset and renew to be positioned even stronger for the future. The economic environment consists of microeconomic and macroeconomic factors.The microeconomic environment refers to things that happen at the individual company or consumer level.Microeconomic factors do not affect the whole economy. Culture plays a very vital role in the determining consumer … Inflation especially affects consumer behavior when wages do not increase to accommodate the increase in prices. 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.

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