Five Factors Influencing Consumer Behaviour

When it comes to branding or marketing your small business, understanding why customers buy what they buy is like having the keys to the kingdom.   

When you can tap into the consumer decision-making process and the key factors that affect the consumer behaviour, you, my friend, will start connecting in ways that trigger more loyalty, more buying. 

So let’s jump right in to some of the consumer behaviour factors that you may not have considered yet. 

• Cultural Factors: Think of it like the 'hometown effect.' Where they grew up (culture), their community (subculture), and even their social ranking (social class) can shape their buying behaviour.

• Social Factors: It's about who they hang out with (groups and networks), their family's preferences, and even their job or status in the community. 

• Personal Factors: This is the 'me' stuff — how old they are, what their job is, whether they're saving or splurging (economic situation), their daily routine and hobbies (lifestyle), and what makes them, well, them (personality & self-concept). 

• Psychological Factors: These are the behind-the-scenes drivers like what gets them going (motivation), how they see the world (perception), what they've learned over the years (learning), and what they stand firm on (beliefs & attitudes). 

• Macroenvironmental Factors: These are the ones that change more often for which marketers must be aware and adapt to stay relevant. Included here would be demographic, economic, cultural, technological, political and environmental shifts. 

Taping into consumer behaviour means taping into emotions

 Ever wonder what really prompts us to say 'yes' to a purchase? It's not just a logical checklist; it's our emotions that are often in the driver's seat. If you are in charge of marketing for your business, it's essential to strive for an emotional response when creating brand strategy as well as in the marketing strategies and tactics you use. 

Whether you're stirring the sense of belonging, puffing up with pride, wrapping up in comfort, spreading the love, planting seeds of hope, or sparking inspiration — these feelings are the real MVPs of decision-making. 

In the next sections, as we dive into the factors that influence buying decisions, keep this in mind: each factor is a pathway to the heart. They shape how we feel, and in turn, drive us towards the choices we make. 

A Deeper Dive into the Five Factors that Influence Consumer Behaviour

 Conducting primary research like interviewing your best customers is the best place to start when it comes to truly understanding them. Then, powered with their words, augment your knowledge with secondary research (like online research) about the factors these five factors that may be influencing their decisions. 

To learn what to ask and how to conduct interviews with your clients that dig into their buying choices, check out my course: How to build a Buyer Persona. 

Now let’s get to it. 

Cultural Influences: The Fabric of Consumer Behaviour

 Understanding the cultural fabric of your consumer base can be incredibly revealing. It involves digging into the values, perceptions, wants, and behaviors that individuals inherit from their surroundings.

 As a small business, recognizing and respecting these cultural elements allows you to craft messages and products that resonate on a deeper level. Consider not just culture in the traditional sense, but also subculture and social class. 

Cultures are the shared values, perceptions, wants, and behaviors that are passed down from one generation to another. They encompass the way a group of people understand the world and interact with it, influencing everything from language and art to norms and societal expectations. 

For instance, Western culture which puts a strong emphasis on personal achievement and freedom is far different than Eastern culture emphasis collective harmony and family. 

Subcultures are like unique clusters within the bigger crowd, where people share certain habits, beliefs, or things they're passionate about. These groups form around what they’re into, whether it’s what they do for fun, their job, their beliefs, or where they live. 

For a small business owner like you, tapping into these subcultures can be super useful. Here’s a look at some subcultures that might be familiar to you: 

• Local Food Enthusiasts: These are the people who love fresh, local food. They’re the ones you'll see at the farmer's market every week, and they really value farm-to-table eating.
• Tech Savvy Consumers: These customers are always up to date on the latest tech. They’re interested in the newest phones, smart home devices, and tech gadgets out there.
• Eco-Conscious Shoppers: This group is all about protecting the environment. They prefer to buy products that are kind to the earth and made in a responsible way.
• Fitness and Wellness Advocates: Health is a top priority for these consumers. They invest in things that promote a healthy lifestyle, like gym memberships, wellness apps, and natural supplements.
• DIY Makers and Crafters: Creative and hands-on, these individuals love anything they can make or build themselves. They're always on the lookout for materials and kits that let them create something unique.
• Pet Lovers: For these people, pets are part of the family, and they're willing to spend on quality products for their animals, from top-notch food to toys and health services. 

Social Class is basically how society is split up based on how much money you make, what kind of job you have, and how much schooling you've been through. Think about it like this: some folks might have fancy jobs or a big pile of cash, and they buy things that are a bit more on the expensive side. This group might be your target if you're selling high-end products or luxury services. 

On the other hand, you've got people who are all about finding the best deals and saving money where they can. They might prefer shopping at places that give them a bang for their buck. If you're running a business that prides itself on value and affordability, these are the customers you'll likely appeal to. 

Everyone spends their money differently, and understanding these spending habits can help you figure out the best way to talk to your customers and make sure what you're selling is something they'd actually want to buy. 

Social Influences: Your Circle's Impact on Buying Behavior

 Our buying choices are often whispered into our ears by the company we keep. Whether it's the fitness enthusiasts at our local gym, fellow avid readers in a book club, or colleagues in our professional network, these circles influence what we deem necessary or cool. 

Family and Membership Groups

Family isn't just our home base; it's our historical compass. The nostalgia of grandma's favorite flowers or Dad's trusted car brand can steer our preferences for a lifetime. And it doesn't stop there — membership groups, from our local community to professional associations, often set a standard for what we buy. 

Aspirational Groups: We all have that circle we aspire to be part of one day. Whether it's a luxury lifestyle group or an elite professional circle, the products they endorse often become our desired purchases.

 Reference Groups: Our peers, whom we respect and relate to, serve as a benchmark for our choices. If they're raving about an artisanal coffee blend, chances are we'll be sipping it too. 

Online Social Networks: Our digital hangouts are more than just social spaces; they're shopping malls in disguise. What we see on these platforms can significantly affect our buying decisions. For me, this is definitely the case when it comes to which local events I decide to attend. 

Influencers and Opinion Leaders: In a world where social media dominates our time, social media influencers wield substantial clout. For businesses, this means that partnering with the right influencer has to the potential to catapult your product into the limelight. 

Word-of-Mouth: A recommendation from a trusted friend can be more powerful than any ad. For businesses, encouraging these conversations through exceptional customer experiences can turn clients into advocates.

In the dance of social influence, it's crucial for small businesses to understand and engage with the various groups that their customers value. From harnessing the power of family traditions to leveraging the sway of digital influencers, the aim is to create not just customers, but community members who believe in your brand's story as much as you do. 

Personal Influences: The Individual Journey

Every one of us is on a unique path, and as we travel through life, our shopping bags change along with our milestones. Consider the following factors contributing to your ideal customers' buying. 

Age and Life Cycle Stage

Life's not static, and neither are our tastes. The sports car we adored in our twenties might make way for something with a bit more room as we start a family.  It's all about how our needs change as we ride through different stages of life.

Occupation and Economic Situation

What we do for a living and how comfortable we are financially has a big say in our shopping habits. A nurse buys scrubs, a factory worker may need steel-toe boots, and a business person may be looking for the perfect high-end suit or a comfortable yet fashionable sweater dress.

 What we do for a living not only impacts our purchase choices but can often impact our decision on how much to spend too. One thing is for certain, when I moved from corporate to entrepreneurship, my buying decisions changed a lot. I’m buying microphones and lighting, I’m buying outfits for book launches and speaking gigs, I’m buying more jeans and better laptops. 

Lifestyle

Each day we write our own story, and our lifestyle is the setting. It influences everything from the running shoes we choose for our morning miles to the gaming console we power up at night. Our daily activities dictate the products we bring into our lives. 

Personality and Self-Concept

At the end of the day, our purchases reflect who we are. The bold might chase after the latest trends, while those who cherish comfort like my hubby might stick with what’s familiar. Our inner selves are the ultimate guide to our shopping behavior. 

Understanding these personal influences is key to unlocking what makes your customers tick. It’s about seeing the world through their eyes and meeting them where they are on their journey. 

Psychological Factors in Consumer Choices

 The mind is a complex landscape, and it's where all our buying decisions start to take shape. Let's delve into the psychology behind the products and services we choose to spend our money on.

 Motivation
What's the carrot on a stick that keeps us moving? It's different for everyone—achievement, security, comfort. Understanding these driving forces can help you connect with what your customers are truly seeking. 

Perception

Perception is a tricky thing; it's like looking through our own personal set of glasses that color everything we see. What one person views as a luxury, another might see as just a basic need. And it's this personal viewpoint that can really flip the script on what a product means to us. 

Let's take a real-life example to unpack this idea. Imagine booking a stay at a Vegas hotel that boasts a 5-star rating. You're thinking you've scored an unbelievable deal, but when you walk through the doors, the reality doesn't quite match up to your expectations. That was the case for my friend and me. We were expecting luxury, but what we got felt more like a solid 3-star experience. 

On the flip side, there were guests who typically go for more budget-friendly options, and to them, this place felt like the height of opulence. They were thrilled. 

It all comes down to what we're used to and what we expect. For us, a 5-star experience has a certain meaning, and this hotel didn't hit the mark. It wasn't about the actual quality of the hotel; it was about how our experiences and expectations shaped our view of it. What we thought was a steal based on the stars was actually just right for the price we paid. It's a reminder that value is often in the eye of the beholder, influenced heavily by our perception and past experiences.

 Learning

Our past purchases are more than just transactions; they’re lessons that shape our future decisions, often without us even being aware of it. It's like each buy is a chapter in our book of preferences, and every choice we make writes the next page. 

Take it from my own playbook. I've changed the way I pick hotels. I used to be swayed by the highest star ratings within a budget-friendly range, thinking they guaranteed a top-notch stay.

 Not anymore. After a few letdowns, I’ve learned to look beyond the stars. Now, I do a deep dive into the reviews, weigh the amenities, and consider the overall vibe of the place to make sure it's in line with what I really want from my stay.

 It’s not just about avoiding disappointment; it’s about ensuring satisfaction. We learn from every experience, tweaking our criteria and refining our choices. It's this learning curve that guides us, almost instinctively, towards the products and experiences that will hit the sweet spot of our expectations.

 So, when we think about what drives our customers, remember: their history with products like ours is informing their present choices. Our job? To be the next great chapter in their shopping story.

Beliefs and Attitudes

Beliefs and attitudes aren't just opinions or ideas we hold; they're the very principles that dictate the boundaries of our consumer behavior. They're the non-negotiables, the must-haves, and the deal-breakers that guide our hands as we reach for one product over another. 

For instance, someone who prioritizes eco-friendliness isn't just buying a product; they're making a statement with each green choice they make. Those who have a hunger for the latest and greatest technology are on a constant quest for innovation—they’re not just shopping, they’re exploring what's next. 

I take this to heart in my own life. Integrity is a cornerstone of my personal philosophy. That's why I'm drawn to brands like Original Skincare; their commitment to honesty resonates with my own values. When it comes to technology, I admire creativity and forward-thinking, which is why I opt for an Apple MacBook—it symbolizes thinking differently. 

Our beliefs and attitudes are like a compass for our consumer journey—they keep us on our path, ensuring that every purchase is more than just an exchange of goods, but a reflection of our identity.

 By tapping into these psychological factors, you can craft marketing strategies and product selections that resonate deeply with your customers' core desires and beliefs. It’s not just about selling a product; it’s about connecting with the person behind the purchase. 

Navigating Macroeconomic Factors: Understanding the Larger World's Impact on Consumer Behavior 

Unlike personal, psychological, and social influences, macroeconomic factors encompass the broader economic and societal forces that shape consumer behavior. These are the external elements, often beyond an individual's control, that can cause significant shifts in how consumers decide where to spend their money. 

A prime example of this is the global pandemic, which dramatically altered consumer priorities and buying habits almost overnight. When the pandemic struck, it threw us all into uncharted waters. Suddenly, there was a swift shift in consumer behavior—online shopping surged, interest in home improvement and fitness equipment skyrocketed, and there was an increased demand for products that facilitated remote work and learning. 

My Pandemic Experience:

When the pandemic hit, I was immediately driven by questions: How would this reshape the landscape of consumer buying? Which sectors would feel the impact the most? And critically, how would we pivot to meet the new needs? I dove headfirst into research, facilitated discussions among peers, and sought answers. 

Suddenly, I found myself as the local authority on pandemic-era marketing, providing workshops to small business owners on how to stay relevant—even when their products couldn't hit the shelves.

 I immediately deleted all my scheduled social media posts because they seemed insensitive and irrelevant given that most of my clients were service based and drastically affected by the stay home orders. I also rebranded an upcoming program to mirror the entrepreneurial spirit battling through these times, as well as the surge in self-care as people hunkered down at home. "Self-Care for Your Business" became a strategic lifeline for those with temporarily shuttered doors, and it resonated deeply.

It was a time of intense one-on-one collaboration with proactive business owners eager to navigate the new consumer behaviors and emerge stronger. 

The pandemic was a stark, rapid shift in consumer behavior, but it underscored an essential truth: the importance of anticipation, adaptability, and a deep grasp of the external factors that drive consumer behavior. 

Other Macroeconomic Factors to Watch: 

• Economic Recessions and Booms: Economic downturns can lead to tightened consumer spending, while economic upswings can increase discretionary spending. During the 2008 financial crisis, consumers prioritized essential goods and affordable luxuries, leading to the rise of the "lipstick effect," where small, indulgent items saw an increase in sales. Small business owners should stay alert to these economic cycles, adjusting their offerings and marketing strategies accordingly. 

• Inflation and Price Fluctuations: Inflation affects purchasing power, leading consumers to seek more value-driven purchases. With ongoing discussions around potential inflation increases, consumers may prioritize essential goods and value-based purchases even more, impacting businesses across sectors. 

• Technological Innovations: Technological breakthroughs can create new markets and render others obsolete. The rise of smartphones has transformed the way we shop, communicate, and access services, pushing businesses to develop mobile-friendly services and products. Keep on top of Artificial Intelligence my friends! It’s changing the world and fast. 

• Environmental Shifts: Increasing awareness of climate change and sustainability has influenced consumer preferences towards eco-friendly and sustainable products. The growing demand for electric vehicles and renewable energy solutions reflects this shift, encouraging businesses to innovate in green technologies and practices. 

• Global Events: Events like the pandemic, natural disasters, or political changes can rapidly alter consumer priorities and behaviors. As global connectivity increases, small businesses must be prepared to adapt to the global events' direct and indirect effects on consumer behavior. 

Understanding these macroeconomic factors is crucial for all businesses, including yours. By keeping an eye on the larger economic and societal trends, you can anticipate shifts in consumer behavior, adapt your strategies, and ensure your business remains resilient and relevant in a constantly changing world. 

Get curious for better marketing results

Understanding consumer behavior isn't just about selling; it's about fitting into your customer's life story in a genuine and meaningful way. When you get why people buy, you're not just pushing a product; you're providing something that fits into their tapestry of life — seamlessly and beautifully. 

So, whether you're watering plants, changing tires, or debugging code, remember: your customers are people first, with stories, dreams, and a whole lot of factors influencing their every purchase. Get curious, get to know them, and change your marketing approach to better appeal to them.