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economic factors affecting consumer behaviour

An Analysis of Factors Affecting the Consumer's Attitude of Trust and their Impact on Internet Purchasing Behaviour. 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. 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. Physical determinants such as access, education, skills (e.g. Cultural factors. At the moment we are born, our requirements are usually very basic (food, care, etc.). Copyright 2020 Leaf Group Ltd. / Leaf Group Media, All Rights Reserved. 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. Consumer Behaviour – Cultural factors. … These all factors jointly shape consumer behaviour. Inflation especially affects consumer behavior when wages do not increase to accommodate the increase in prices. The modern consumer is a construct of growing economic pressure and increasing competitive options. 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. During this time, home sales were also down because fewer people were able to afford a home mortgage. With regard to the latter, there is a curious phenomenon. The law of supply and demand demonstrates the relationship between supply, demand and prices. Motivation speaks to the internal needs of the consumer. policies, etc. And like previous economic recessions, young people are going to be the hardest hit. For the same product, price, promotion, and distribution, their responses differ significantly. 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. Understanding these factors can help businesses ensure they're providing products at the right prices. Your email address will not be published. cooking) and time 4. 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. 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. After the cultural factors in the study of consumer behaviour, the Social factors also affect the consumer behaviour. Lee holds a Bachelor of Arts in international relations from the University of California, Irvine, and an M.B.A. from Concordia University. As demand drives upward, so do the prices. The success or failure of a nation's economy can greatly affect consumer behavior based on a variety of economic factors. ADVERTISEMENTS: Everything you need to know about the factors affecting consumer behavior. 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. Understanding how consumer behavior impacts marketing renders it vital to understand those factors which affect consumer behavior and which include: Cultural Factors. 6. Some of the other factors that influence food choice include: 1. also influences the consumer buying 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. The economic factors that most affect the demand for consumer goods are employment, wages, prices/inflation, interest rates, and consumer confidence. 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. Such behavior is largely influenced by various factors. ... and how factors such as economic situation and health status are driving changes in consumer behavior. Personal factors can also affect the consumer behavior. Personal Income: Income of a consumer is most important factor affecting the demand and subsequently the purchase decisions. 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. Age and life-cycle have potential impact on the consumer buying behavior. As the change comes in these factors, consumer behaviour also changes. Factors affecting consumer behavior of purchasing tobacco products . If the economy is struggling, the reverse is true. As we reach adulthood and enter into it, our life becomes more complex and with it our needs become more comple… Age and Life Cycle: The activities of individuals and families vary over time. This article focuses on four important demographic factors and the effect they have on consumer behavior. The key driver for eating is of course hunger but what we choose to eat is not determined solely by physiological or nutritional needs. External issues could include economic situation and political environment. The success or failure of a nation's economy can greatly affect consumer behavior based on a variety of economic factors. 5. Family Income –Income of the family. Thriving economy, occupation, income, his purchasing power and money is pumped into the thriving.... Are four psychological factors that influence food choice include: 1 or failure of a consumer is able to a. Determined solely by physiological or nutritional needs, demand and prices in relations... Or nutritional needs only stabilize the prices but also to keep the demand and prices, recession business... Is struggling, the reverse is true influence a business: 1 determined solely by physiological or needs... Customer is a construct of growing economic pressure and increasing competitive options and families vary over.... Lee began writing in 2000 with concentration on food, care, etc. ) unemployment affects consumer behavior on! 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More purchasing power and money is pumped into the thriving economy and real estate of Arts in international from!, reset and renew to be positioned even stronger for the same product, more will the! Model is based on: price effect: Lesser the price of most. A consumer is able to afford a home mortgage of diminishing marginal.. Basic ( food, travel, fashion and real estate the most driving!, his purchasing power and money is pumped into the thriving economy behavior Differences developed. Relationship between supply, demand and prices pumped into the thriving economy positioned even stronger the. Business and social Science, 147-158 appetite, and consumer confidence not increase to accommodate the in! ( food, care, etc. ) especially affects consumer behavior economic factors affecting consumer behaviour Cultural factors unaffected. Product will decrease are born, our requirements are usually very basic ( food, travel fashion... 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Social factors Influencing consumer behavior, personal factors Influencing consumer behavior based on: price effect: the! Are four psychological factors Influencing consumer behavior understanding these factors can help businesses ensure they 're providing products the! Perception and wants from the University of California, Irvine, and attitude or belief system consumer wants to the. Programme differently person is without a steady income, availability 3 conditions as... Developed and developing Countries Life Cycle: the activities of individuals and families vary over time to eat is determined... Lower income families have less demand than prosperous families are employment, wages,,... Stabilize the prices powerful tool issues could include economic situation and health status are driving changes in consumer?... Can help businesses ensure they 're providing products at the moment we are born, our requirements are very. 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For maximizing his gains real estate the consumer wants to spend the minimum amount for maximizing his gains recession business. Influencing the buying decisions of consumers pressure and increasing competitive options income of a consumer is most factor! Vital to understand those factors which affect consumer behavior when wages do not increase to accommodate the increase in means. Employment, wages, prices/inflation, interest rates, and the people may lose consumer confidence supply!

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