Unit 2 - Assignment

Course Name: Consumer Behavior

Module 2: ENVIRONMENTAL INFLUENCES ON CONSUMER BEHAVIOR
Q1. What factors influence consumer behavior?

Answer: Here are 5 major factors that influence consumer behavior:

Psychological Factors (motivation, perception, learning, beliefs and attitudes)
Social Factors (reference groups, family, roles and status)
1. Cultural Factors (culture, subculture, social class system).
Personal Factors (age and life-cycle stage, occupation, economic circumstances, lifestyle,
personality and self-concept)
2.
3. Economic Factors
1. Psychological Factors
Human psychology is a major determinant of consumer behavior. These factors are difficult to
measure but are powerful enough to influence a buying decision.
Some of the important psychological factors are:

i. Motivation
When a person is motivated enough, it influences the buying behavior of the person. A person has
many needs such as social needs, basic needs, security needs, esteem needs, and self-
actualization needs.
ii. Perception
Consumer perception is a major factor that influences consumer behavior. Customer perception is
a process where a customer collects information about a product and interprets the information to
make a meaningful image of a particular product.
iii. Learning
When a person buys a product, he/she gets to learn something more about the product. Learning
comes over a period of time through experience.
iv. Attitudes and Beliefs
Consumers have certain attitudes and beliefs which influence the buying decisions of a consumer.
Based on this attitude, the consumer behaves in a particular way towards a product.
2. Social Factors
Humans are social beings and they live around many people who influence their buying behavior.
i. Family
Family plays a significant role in shaping the buying behavior of a person.
ii. Reference Groups
A reference group is a group of people with whom a person associates himself.
iii. Roles and status
A person is influenced by the role that he holds in the society.

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Q2. What environmental influences affect business buying behavior?

3. Cultural factors
A group of people is associated with a set of values and ideologies that belong to a particular
community. Some of the cultural factors are:
i. Culture
Cultural Factors have a strong influence on consumer buying behavior. Cultural Factors include the
basic values, needs, wants, preferences, perceptions, and behaviors
ii. Subculture
Within a cultural group, there exists many subcultures. These subcultural groups share the same
set of beliefs and values.
iii. Social Class
Each and every society across the globe has the form of social class. The social class is not just
determined by the income, but also other factors such as the occupation, family background,
4. Personal Factors
Factors that are personal to the consumers influence their buying behavior. These personal factors
differ from person to person, Some of the personal factors are:
i. Age
Age is a major factor that influences buying behavior. The buying choices of youth differ from that of
middle-aged people. Elderly people have a totally different buying behavior.
ii. Income
Income has the ability to influence the buying behavior of a person. Higher income gives higher
purchasing power to consumers
iii. Occupation
Occupation of a consumer influences the buying behavior. For example, a doctor would buy clothes
according to this profession while a professor will have different buying pattern.
iv. Lifestyle
Lifestyle is an attitude, and a way in which an individual stay in the society. For example when a
consumer leads a healthy lifestyle, then the products he buys will relate to healthy alternatives to
junk food.
5. Economic Factors
The consumer buying habits and decisions greatly depend on the economic situation of a country or
a market. Economic factors bear a significant influence on the buying decision of a consumer.
Some of the important economic factors are:
i. Personal Income
When a person has a higher disposable income, the purchasing power increases simultaneously.
Disposable income refers to the money that is left after spending towards the basic needs of a
person.
ii. Family Income
Family income is the total income from all the members of a family. When more people are earning
in the family, there is more income available for shopping basic needs and luxuries.
iii. Consumer Credit
When a consumer is offered easy credit to purchase goods, it promotes higher spending. Sellers
are making it easy for the consumers to avail credit in the form of credit cards, easy installments,
bank loans, hire purchase, and many such other credit options.
iv. Liquid Assets
Consumers who have liquid assets tend to spend more on comfort and luxuries. Liquid assets are
those assets, which can be converted into cash very easily.
v. Savings
A consumer is highly influenced by the amount of savings he/she wishes to set aside from his
income. If a consumer decided to save more, then his expenditure on buying reduces.

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Q2. What environmental influences affect business buying behavior?

Answer Environmental Factors Affecting Consumer buying Behaviour. It is defined as a complex

sum total of knowledge, belief, traditions, customs, art, moral law or any other habit acquired by
people as members of society. Our consumer behaviour that is the things we buy are influenced by
our background or culture.

Business buyers are subject to many influences when they make their buying decisions. Economy
is one of the major influences in some marketers’ perception. They think buyers will favor the
supplier who offers the lowest price rate or the best product or the most service. They focus on
offering strong economic benefits to buyers. However, business buyers actually respond to both
economic and personal factors.

Today, most B-to-B marketers recognize that emotions play a vital role in business buying
decisions. For example, you might expect that an advertisement promoting large trucks to corporate
fleet buyers would stress objective performance, technical, and economic factors. Though, an ad for
Volvo heavy-duty trucks shows two drivers arm-wrestling and claims, “it solves all your fleet
problems, except who gets to drive.”
There are many factors which actually influence on business buyers:
 Environmental Factors
Business buyers are influenced heavily by factors in the current and expected economic
environment, such as the level of primary demand, the economic outlook, and the cost of the
money. When economic uncertainty rises, business buyers cut back their new investment and
attempt to utilize their inventories. There are many other factors includes in environment factors,
these are economic development, supply conditions, technological changes, political and regulatory
developments, competitive development and culture and customs. These have impact on business
market directly or indirectly.
For example, governments intervene and bans chemicals used for making medicines by
pharmaceutical companies for good of the public. Recently (March 2016) Indian government has
banned over 300 drugs which had an impact on many organisations purchasing or materials.
 Organizational Factors
All buying organizations have their own objectives, policies, procedures, structures, and systems.
The business marketers must understand all these factors well because so many queries are
connected to these factors. Like how many people are involved in buying decisions? Who they are?
What are the evaluation criteria? What are the company’s policies and limitation for their buyers?
For example, some organisations rely on high quality of products for manufacturing. The
purchasing process involves most of the discussion on quality. Some government organisations,
like Indian railways, buy products by bidding process. Here most of the time lowest bid is often
selected. Some other organisations rely more on factors other than price. The suppliers/business
marketers need to create an adjacent marketing mix that suits the procedure of buying for individual
organisation.

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  Interpersonal Factors
Usually buying center includes many participants, who influence each other. So, interpersonal
factors also influence the business buying process. Though, it is quite difficult to assess such
interpersonal factors and group dynamics. Managers do not wear labels that differentiate them as
important or unimportant buying participants, and powerful influencers are often buried behind the
scene. Interpersonal factors may include authority, status, empathy, and persuasiveness of
participants in business buying process.
For example, due to scarcity of underground water in recent decades in certain regions, farmers
have opted to grow grains that require less water supply. This affects the use of fertilisers and
pesticides which has to suit the new crops. Organisations have to accordingly adjust to the shortage
of crops which could be available in a different region. Pesticide and fertilisers manufacturers also
forces to change their strategies
 Individual Factors
Individual has a vital role in business buying process. Each participant in the business buying-
decision process brings in personal motives, preferences, and perceptions. But these individual
factors are affected by personal characteristics of each person, such as, age, education, income,
professional identification, their job status, personality, and attitudes towards risk. All buyers have
different buying style.
So these are all the factors that influence business buyers. Marketers have to keep all these factors
in their mind while making marketing plans or products or services.

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Q3. What are the four major factors that influence consumer buyer behavior?

Answer: Factors Influencing the Consumer Behaviour

Four main elements affect consumer buying behaviour:
 Cultural Factors
 Social Factors
 Personal Factors
 Psychological Factors
These characteristics influence consumers' choices of specific products and brands. Recognising
these aspects' effects is crucial for developing marketing mix strategies that appeal to the intended
market's preferences despite many factors being beyond the marketers' control. Cultural, social,
personal, and psychological traits greatly impact consumers' buying behaviour and the ultimate
purchase decision.
1. Cultural Factors
Understanding a person's consumer behaviour depends heavily on their culture. In essence, culture
is an integral component of every community and significantly influences human desires and
behaviour. Marketing professionals must be very careful when assessing the cultures of various
groups, regions, or even entire countries because the impact of culture on consumer
behaviour differs from country to country.
 Culture
It encompasses human society, the roles that society performs, the conduct of society, and its
ideals, traditions, and customs. Culture must be investigated since it significantly impacts how
consumers behave.
 Subculture
A subculture is a collection of individuals who hold similar beliefs, practices, and values. You can
categorise them as being composed of people belonging to the same country, region, religion, or
racial or ethnic group.
 Social Class
Every culture has a social class; in fact, all societies have one. Keep in mind that a group of
consumers' social class is described by more than just their wealth.
2. Social Factors
Groups (reference groups, aspirational groups, and member groups), families, roles, and status are
all included in this. One of the aspects that has a big impact on consumer behaviour is social
considerations. Reference groups, family, and societal roles and status are the three subcategories
into which they fall.
 Reference groups
Reference groups have a significant possibility of influencing consumer behaviour under social
factors. Of course, the effect differs for various brands and goods. There is frequently a voice of
opinion in this group.
 Family
A consumer's behaviour can be influenced not just by their objectives and personalities but also by
their families and relatives,
 Role and status
People who are members of various clubs, organisations, or groups have roles and statuses to
uphold.
3. Personal Factors
It considers factors like age and life cycle stage, job, financial situation, way of life
(including hobbies, interests, demography, and activities), personality, and sense of self.
Age and life cycle stage
The two most significant subfactors under personal factors are the consumer's age and his
or her life cycle. The consumer’s purchasing alternatives, the reason for the purchase, and
his choices to buy things change as he ages and goes through his life cycle.

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  Occupation
The products and services consumers purchase are influenced by their line of work. The
professions group has a higher than usual interest in using various goods and services
provided by businesses. In actuality, businesses create unique items for various
occupational groups.
 Financial or economic situation
With the use of money, anything can be bought or sold. If a consumer's financial status is
unstable or poor, it will impact their ability to make purchases. In fact, if a nation's economy
is losing ground, it will undoubtedly impact its citizens' purchasing and spending habits.
 Lifestyle
People from various cultures, subcultures, professions and even social classes have
various ways of living. People's interests, views, and actions can be confirmed by their way
of life. These various lifestyles influence consumer behaviour.
 Personality
Every person is unique, and they all have distinctive personalities. Their individual
physiologies and personalities influence the purchases they make. Therefore, the decision
to buy goods and services differs from one individual to another.
4. Psychological Factors
For marketing techniques to be effective, the marketer must be aware of who is engaged in
the purchasing decision and what function each person plays. The four psychological
factors affecting consumer behaviour are motivation, perception, learning, and beliefs and
attitudes.
Motivation
The act of motivating someone involves triggering their innate desires and wants. It may
also be referred to as consumer requirements and goals. These requirements may be
psychological, security-related, social, esteem-related, or self-actualizing.
Perception
Sensing the environment and the circumstances around to make decisions in response to it
is perception. This distinguishes the capacity for making decisions.
Learning and experience
Before making a purchase decision, a consumer learns about available goods and services.
Nowadays, learning and self-education are done both online and in groups. Experience is
learning from the mistakes made in the past when using a product or service. Again,
learning and experience significantly impact how consumers behave and make decisions
about what to buy.
Attitude and beliefs
A consumer's attitude is their pleasant or unfavourable emotional state or sensation and
their propensity to react to specific behaviours and activities. Thus, when analysing human
behaviour, attitude and beliefs are also significant and must be taken into account.

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Q4. What factors influence consumer purchases?

Answer: Numerous factors influence consumer purchasing decisions. The hard work involves
getting to the bottom of these influences. If you do, you’ll connect with your audience. So, what are
some factors that influence consumer purchasing decisions

1. Quality (53%) – The Gold Standard of Decision-Making

Consumers have spoken, and quality reigns supreme. More than half of shoppers prioritize the
quality of a product when making a purchase. This section explores why the quest for top-notch
products is a driving force in the factors affecting purchase decisions.
2. Cost (36%) – Balancing the Budget: A Delicate Dance
Following closely behind, cost is a significant factor for many consumers. Bargain hunters rejoice!
More than one-third of shoppers keep a watchful eye on the price tag, seeking value for their hard-
earned dollars. Discover why cost is a crucial component in the consumer decision-making
equation.
3. Trust in the Brand (32%) – Taking the Leap of Faith
For a considerable number of consumers, trust in a brand is pivotal. Whether it’s a long-standing
relationship or a newfound sense of reliability, 32% of shoppers make decisions based on their level
of trust in a particular brand. Uncover the importance of trust and its impact on the consumer’s
journey.
4. Good Reputation (31%) – Word of Mouth in the Digital Age
A good reputation is like a beacon in the consumer landscape. About a third of shoppers are
swayed by a brand’s positive image, emphasizing the power of word-of-mouth and a stellar track
record. Explore how reputation management influences consumer perceptions and choices.
5. Positive Customer Reviews (31%) – Peer Approval in the Digital Marketplace
In the digital age, the opinions of fellow shoppers matter. Positive customer reviews carry weight,
influencing 31% of consumers as they seek the experiences of others before making their own
choices. Navigate the online review landscape and understand its impact on consumer decision-
making.
6. Special Offers/Discounts (31%) – The Thrill of a Deal
Who doesn’t love a good bargain? Special offers and discounts play a significant role, capturing the
attention of 31% of consumers who are drawn to the allure of savings. Dive into the world of
discounts and understand their influence on consumer behavior.
7. Fits with My Personality/Style (29%) – Making it Personal
Shopping isn’t just about acquiring goods; it’s an expression of personal style. Nearly 30% of
consumers choose products that resonate with their personality, showcasing the importance of
individuality in the decision-making process. Explore the connection between personal identity and
consumer choices.
8. Good Customer Service (27%) – The Human Touch in Shopping
A positive shopping experience extends beyond the purchase itself. Good customer service, valued
by 27% of consumers, adds a human touch that enhances satisfaction and loyalty. Examine the role
of customer service in fostering lasting relationships between consumers and brands.
9. Familiarity with the Brand (23%) – Comfort in the Known
The familiar is comforting for many shoppers. Twenty-three percent make decisions based on their
familiarity with a brand, finding solace in the known rather than venturing into the unknown. Uncover
the psychology behind brand familiarity and its impact on consumer choices.
10. Convenience to Find/Buy (20%) – Seamless Shopping Experiences
In our fast-paced world, convenience is key. For 20% of consumers, the ease of finding and
purchasing a product is a crucial factor, emphasizing the importance of a seamless shopping
experience. Explore the role of convenience in shaping the modern consumer’s path to purchase.

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Q5. “What are the 5 main factors that influence purchasing decisions?
Answer: Purchasing decisions are rarely made in an instant. As consumers become more
discerning about how they spend their money online, they’re more likely to be influenced by a range
of factors, from the credibility of your company to the unique experience you can offer.
Studies have shown that the consumer decision making process is a complex and versatile thing.
Everything from a client’s past experiences with your industry, to their socio-economic environment
can influence their purchase decision. For companies in the competitive e-commerce world, this
means it’s crucial to gain a clear insight into what’s actually influencing your customer’s choices.

1. The Information on Product Pages

Since the pandemic, the shift to online shopping has accelerated on a massive scale.
Around 89% of buyers who shopped online during the pandemic said they wouldn’t return to
exclusively in-store personal shopping experiences in the future. However, just because consumers
appreciate the convenience of online shopping, doesn’t mean they’re willing to accept a less
informative, supportive, and educational buyer journey.
The information you include about your product or service on a website page can have a huge
impact on the chances of your customer completing the buying process. Today’s consumers
demand more insights into product details, benefits, and values than ever. Some are even turning to
AR applications, so they can more easily visualize the products they’re going to get before buying.
Enhancing your product pages with plenty of relevant, useful, and engaging information will help
consumers make the right decisions about which products to buy as they check for alternatives.
With the right product page design, you can even reduce your customer acquisition costs, and
increase average order value, by suggesting which products might work well together, or providing
customers with a narrative about each item.
The Dialogue app, for example, allows companies to create unique upselling and cross-selling
opportunities within the product page and checkout pages, by showing items frequently purchased
together. You can even create automatic bundle offers based on your website data.

2. Personalized Micro Moments

Additional information and guidance aren’t the only things today’s shoppers miss from in-person
interactions. They’re also craving the personalized experiences and that emotional connection they
used to get when shopping with a physical sales rep. Ecommerce personalization is emerging as a
critical strategy for business leaders who want to build brand loyalty and encourage repeat
purchases.
Today’s consumers want the brands they buy from to understand their needs, and respond to them
with unique solutions. This means a one-size-fits-all approach to selling is no longer appropriate for
most consumers. Instead, business leaders need to think about how they can adapt their website
dynamically to suit consumer behavior, and the different decisions consumers make.
Implementing personalized elements into your store can be an excellent way to increase your
chances of sales. You could display different content based on your customer’s browsing habits, or
offer unique offers to different kinds of clients, to help them feel special.
Personalization tools can help with everything from optimizing the checkout to suit the specific
needs of each customer, to delivering the right offers and deals at the perfect time to increase
conversions. Whatever you do, your customers should feel like the shopping experience they get is
unique to them.

3. Social Proof and Credibility

Today’s consumers are driven by the constant search for exceptional, reliable, and
trustworthy customer experiences. Though online shopping has become more commonplace in
recent years, so have various threats facing today’s digital consumers. This means many clients are
unwilling to hit the buy button unless they have evidence, they can trust your business first.
There are various ways companies can infuse their e-commerce store with a sense of credibility.

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Optimizing the checkout page with various trust badges from transactional leaders is a good start.
Advertising the rewards and accreditations you’ve achieved in the past can also make customers
more likely to trust you during the decision process.
Perhaps the easiest strategy of all is to leverage the reviews and testimonials left by your existing
customers as a form of social proof. According to studies, around 90% of people read
reviews online before they purchase a product. Highlighting your reviews on your product pages
and throughout your website will show customers you’ve already proven your worth to other
customers.
You can even publish negative reviews, and use them as an opportunity to show customers how
you deal with unhappy clients and turn them into advocates for your brand. Remember, it’s not
enough to simply collect reviews from customers, you need to make sure you’re willing to act on
them.

4. The Customer Experience

Customer experience has become the most important part of any purchasing decision in today’s e-
commerce landscape. 58% of customers even say they’ll pay more for an item they’re purchasing if
they know they’re going to get a good customer experience as a result. To generate a good
experience for your online store, you’ll need to start by thinking about the customer journey.
Think about how your customer navigates through your site to search for the products they need,
whether they consume reviews and different information on your product pages and blog before
making a purchase, and how you can help them make the right decisions. The simplest changes
can make the biggest differences to customer experience, such as:
Improving the navigation process:
Helping customers to move seamlessly through your online website when they’re shopping and
providing them with personalized content as they shop will ensure quicker, more convenient
conversions.
Simplifying the checkout
Give your customers the option to add new items to their basket from within the checkout, so they
don’t have to hit the back button. Give them a range of payment options to choose from, and
consider implementing a guest checkout process.
Making returns easier
Sometimes companies will need to return a product, and they don’t want to deal with a complicated
process when this happens. Making the returns journey as easy as the purchasing journey will have
excellent results for your brand reputation.
At the same time, make sure there’s always someone available to offer help to your customers
when they need it. Investing in chatbots to answer common questions, and building a good overall
customer service strategy into your store should increase your sales.

5. Available Offers and Values

Around 50% of customers say they’re consistently spending less this year. With various cost of
living crises and recessions to worry about, purchasing decisions are becoming more difficult. This
means you need to ensure you’re giving your customers an excellent deal.
One option could be to create subscription options for the products your customers buy most, to
help them save money on their repeat purchases. Subscriptions help to reduce some of the
headaches of remembering to buy products for customers, and help your company access a source
of recurring revenue. Alternatively, you could consider giving special deals on price to your best
customers.
Track your VIP clients and offer them special deals when they make multiple purchases in a row.
You can even send different deals straight from your shop to different customers using
segmentation. Even simple offers, like giving your customers access to free shipping can improve
their evaluation of your store. Free shipping is actually one of the most important factors influencing
the decision making process. It helps customers feel like they’re getting a great deal.