economic factors affecting consumer behaviour

Stephanie Lee began writing in 2000 with concentration on food, travel, fashion and real estate. Psychological factors also play a pivotal role in consumer behavior. An Analysis of Factors Affecting the Consumer's Attitude of Trust and their Impact on Internet Purchasing Behaviour. If the economy is strong, consumers have more purchasing power and money is pumped into the thriving economy. Demand. Following the 2008 financial crisis, young people were burdened with debt, high unemployment and … Lee holds a Bachelor of Arts in international relations from the University of California, Irvine, and an M.B.A. from Concordia University. how much an individual spends on the purchase of goods and services that contribute to … This article focuses on four important demographic factors and the effect they have on consumer behavior. The success or failure of a nation's economy can greatly affect consumer behavior based on a variety of economic factors. 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. Many factors, specificities and characteristics influence the individual in what he is and the consumer in his decision making process, shopping habits, purchasing behavior… 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. Lifestyle. The key driver for eating is of course hunger but what we choose to eat is not determined solely by physiological or nutritional needs. Lower income families have less demand than prosperous families. Below are some microeconomic factors that may influence a business: 1. An increase in inflation means an increase in prices. 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 During this time, home sales were also down because fewer people were able to afford a home mortgage. policies, etc. After the cultural factors in the study of consumer behaviour, the Social factors also affect the consumer behaviour. 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, The economic factors that most affect the demand for consumer goods are employment, wages, prices/inflation, interest rates, and consumer confidence. 3. She has written for Amnesty International and maintains three blogs. And like previous economic recessions, young people are going to be the hardest hit. Consumer behavior is affected by internal and external issues. This affects whether or not a consumer is able to afford the higher price. Suppliers. ... – 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. 10 Consumer Behavior Differences between developed and developing Countries. 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. Copyright 2020 Leaf Group Ltd. / Leaf Group Media, All Rights Reserved. Ahmed, E.-K. (2012, November 1). How you supply your goods, i.e., the distribution chain. Social factors play an essential role in influencing the buying decisions of consumers . 5. Unemployment affects consumer behavior because if a person is without a steady income, his purchasing power decreases considerably. Note: Apart from these factors other economic conditions such as inflation, recession, business cycles, etc. Age and family status … Your email address will not be published. Understanding these factors can help businesses ensure they're providing products at the right prices. Supply and demand affect consumer behavior because if a product is too expensive, consumer demand for that product will decrease. Understanding how to motivate your customer is a powerful tool. Cultural factors. Some of the other factors that influence food choice include: 1. Family Income –Income of the family. 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. It is undoubtedly an essential factor. Some of these differences are easily noticeable whereas the others might be a little difficult to observe. CPG companies can adapt to these changes by taking action to respond, reset and renew to be positioned even stronger for the future. Physical determinants such as access, education, skills (e.g. COVID-19 is a health and economic crisis that has a sustainable impact on consumer attitudes, behaviors and purchasing habits. Consumer spending is one of the most important driving forces for global economic growth. Factors affecting consumer behavior of purchasing tobacco products . ADVERTISEMENTS: Everything you need to know about the factors affecting consumer behavior. cooking) and time 4. If the economy is struggling, the reverse is true. A struggling economy affects factors such as employment and interest rates, and the people may lose consumer confidence. Personal Income: Income of a consumer is most important factor affecting the demand and subsequently the purchase decisions. 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. Required fields are marked *, Economic Factors Influencing Consumer Behavior. 6. Growing up, children learn basic values, perception and wants from the family and other important groups. However, there are several factors affecting buying decisions and consumer behavior. The consumer wants to spend the minimum amount for maximizing his gains. At the moment we are born, our requirements are usually very basic (food, care, etc.). Consumer Behaviour – Cultural factors. For the same product, price, promotion, and distribution, their responses differ significantly. Age and life-cycle have potential impact on the consumer buying behavior. Economic model of Consumer Behaviour. Economic determinants such as cost, income, availability 3. 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. Business Dictionary: Law of Supply and Demand. Age. Market size. With regard to the latter, there is a curious phenomenon. As the change comes in these factors, consumer behaviour also changes. Factors Influencing Consumer Behaviour: Consumer behaviour is affected by a number of factors. Some of the important personal factors that influence the buying behavior are: lifestyle, economic situation, occupation, age, personality and self concept. Factor affecting Consumer Behavior. Supply. Biological determinants such as hunger, appetite, and taste 2. The modern consumer is a construct of growing economic pressure and increasing competitive options. The success or failure of a nation's economy can greatly affect consumer behavior based on a variety of economic factors. As demand drives upward, so do the prices. Consumer behavior is influenced by cultural factors … 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. 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. 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. Such behavior is largely influenced by various factors. 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. The needs are also different. … 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. Motivation speaks to the internal needs of the consumer. Social Factors affecting Consumer Behaviour Consumer Behaviour is an effort to study and understand the buying tendencies of consumers for their end use. ... and how factors such as economic situation and health status are driving changes in consumer behavior. How Do Psychological Factors Play a Role in Consumer Behaviour? International Journal of Business and Social Science, 147-158. Lifestyle, a term proposed by Austrian psychologist Alfred Adler in 1929, refers to the way … Your email address will not be published. Understanding how consumer behavior impacts marketing renders it vital to understand those factors which affect consumer behavior and which include: Cultural Factors. 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. In this model, consumers follow the principle of maximum utility based on the law of diminishing marginal utility. To impact of various factors, consumer behaviour also changes demand drives upward, do. If the economy is struggling, the reverse is true only stabilize the prices but also keep! Skills ( e.g increasing competitive options renew to be positioned even stronger for the same product, price,,. 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