Short answers about Business

Some Factors That Influence Consumers’ Buying Behavior

You’ve been a consumer with purchasing power for much longer than you probably realize—since the first

time you were asked which cereal or toy you wanted. Over the years, you’ve developed rules of thumb or mental

shortcuts providing a systematic way to choose among alternatives, even if you aren’t aware of it. Other consumers

follow a similar process, but different people, no matter how similar they are, make different purchasing decisions.

You might be very interested in purchasing a Smart Car, but your best friend might want to buy a Ford F-150 truck.

What factors influenced your decision and what factors influenced your friend’s decision?

While some influences may be temporary and others are long lasting, different factors can affect how buyers

behave—whether they influence you to make a purchase, buy additional products, or buy nothing at all. Let’s now

look at some of the influences on consumer behavior in more detail.

Situational Factors

Have you ever been in a department story and couldn’t find your way out? No, you aren’t

necessarily directionally challenged. Marketing professionals take physical factors such as a store’s

design and layout into account when they are designing their facilities. Presumably, the longer you

wander around a facility, the more you will spend. Grocery stores frequently place bread and milk

products on the opposite ends of the stores because people often need both types of products. To buy

both, they have to walk around an entire store, which of course, is loaded with other items they might

see and purchase.

Store locations also influence behavior. Starbucks has done a good job in terms of locating its

stores. It has the process down to a science; you can scarcely drive a few miles down the road without

passing a Starbucks. You can also buy cups of Starbucks coffee at many grocery stores and in

airports—virtually any place where there is foot traffic.

Physical factors that firms can control, such as the layout of a store, music played at stores, the

lighting, temperature, and even the smells you experience are called atmospherics. Perhaps you’ve

visited the office of an apartment complex and noticed how great it looked and even smelled. It’s no

coincidence. The managers of the complex were trying to get you to stay for a while and have a look at

their facilities. Research shows that “strategic fragrancing” results in customers staying in stores

longer, buying more, and leaving with better impressions of the quality of stores’ services and

products. Mirrors near hotel elevators are another example. Hotel operators have found that when

people are busy looking at themselves in the mirrors, they don’t feel like they are waiting as long for

their elevators.Patricia Moore, “Smells Sell,” NZ Business, February 2008, 26–27.

Not all physical factors are under a company’s control, however. Take weather, for example.

Rainy weather can be a boon to some companies, like umbrella makers such as Totes, but a problem

for others. Beach resorts, outdoor concert venues, and golf courses suffer when it is raining heavily.

Businesses such as automobile dealers also have fewer customers. Who wants to shop for a car in the

rain?

Firms often attempt to deal with adverse physical factors such as bad weather by offering

specials during unattractive times. For example, many resorts offer consumers discounts to travel to

beach locations during hurricane season. Having an online presence is another way to cope with

weather-related problems. What could be more comfortable than shopping at home? If it’s raining too

hard to drive to the GAP, REI, or Abercrombie & Fitch, you can buy products from these companies

and many others online. You can shop online for cars, too, and many restaurants take orders online

and deliver.

Crowding is another situational factor. Have you ever left a store and not purchased anything

because it was just too crowded? Some studies have shown that consumers feel better about retailers

who attempt to prevent overcrowding in their stores. However, other studies have shown that to a

certain extent, crowding can have a positive impact on a person’s buying experience. The

phenomenon is often referred to as “herd behavior.”Carol J. Gaumer and William C. Leif, “Social

Facilitation: Affect and Application in Consumer Buying Situations,” Journal of Food Products

Marketing 11, no. 1 (2005): 75–82.

If people are lined up to buy something, you want to know why. Should you get in line to buy it

too? Herd behavior helped drive up the price of houses in the mid-2000s before the prices for them

rapidly fell. Unfortunately, herd behavior has also led to the deaths of people. In 2008, a store

employee was trampled to death by an early morning crowd rushing into a Walmart to snap up

holiday bargains.

Social Situation

The social situation you’re in can significantly affect your purchase behavior. Perhaps you have

seen Girl Scouts selling cookies outside grocery stores and other retail establishments and purchased

nothing from them, but what if your neighbor’s daughter is selling the cookies? Are you going to turn

her down or be a friendly neighbor and buy a box (or two)?

Companies like Pampered Chef that sell their products at parties understand that the social

situation makes a difference. When you’re at a friend’s Pampered Chef party, you don’t want to look

cheap or disappoint your friend by not buying anything. Certain social situations can also make you

less willing to buy products. You might spend quite a bit of money each month eating at fast-food

restaurants like McDonald’s and Subway. Where do you take someone for your first date? Some

people might take a first date to Subway, but other people would perhaps choose a restaurant that’s

more upscale. Likewise, if you have turned down a drink or dessert on a date because you were

worried about what the person you were with might have thought, your consumption was affected by

your social situation.Anna S. Matilla and Jochen Wirtz, “The Role of Store Environmental Stimulation

and Social Factors on Impulse Purchasing,” Journal of Services Marketing 22, no. 7 (2008): 562–67.

Time

The time of day, time of year, and how much time consumers feel like they have to shop affect

what they buy. Researchers have even discovered whether someone is a “morning person” or “evening

person” affects shopping patterns. Have you ever gone to the grocery store when you are hungry or

after pay day when you have cash in your pocket? When you are hungry or have cash, you may

purchase more than you would at other times. Seven-Eleven Japan is a company that’s extremely in

tune to time and how it affects buyers. The company’s point-of-sale systems at its checkout counters

monitor what is selling well and when, and stores are restocked with those items immediately—

sometimes via motorcycle deliveries that zip in and out of traffic along Japan’s crowded streets. The

goal is to get the products on the shelves when and where consumers want them. Seven-Eleven Japan

also knows that, like Americans, its customers are “time starved.” Shoppers can pay their utility bills,

local taxes, and insurance or pension premiums at Seven-Eleven Japan stores, and even make

photocopies.Allan Bird, “Retail Industry,” Encyclopedia of Japanese Business and

Management(London: Routledge, 2002), 399–400.

Companies worldwide are aware of people’s lack of time and are finding ways to accommodate them.

Some doctors’ offices offer drive-through shots for patients who are in a hurry and for elderly patients

who find it difficult to get out of their cars. Tickets.com allows companies to sell tickets by sending

them to customers’ mobile phones when they call in. The phones’ displays are then read by barcode

scanners when the ticket purchasers arrive at the events they’re attending. Likewise, if you need

customer service from Amazon.com, there’s no need to wait on the telephone. If you have an account

with Amazon, you just click a button on the company’s Web site and an Amazon representative calls

you immediately.

Mood

Have you ever felt like going on a shopping spree? At other times wild horses couldn’t drag you

to a mall. People’s moods temporarily affect their spending patterns. Some people enjoy shopping. It’s

entertaining for them. At the extreme are compulsive spenders who get a temporary “high” from

spending.

A sour mood can spoil a consumer’s desire to shop. The crash of the U.S. stock market in 2008

left many people feeling poorer, leading to a dramatic downturn in consumer spending. Penny

pinching came into vogue, and conspicuous spending was out. Costco and Walmart experienced

heightened sales of their low-cost Kirkland Signature and Great Value brands as consumers

scrimped.“Wal-Mart Unveils Plans for Own-Label Revamp,” Financial Times, March 17, 2009,

15. Saks Fifth Avenue wasn’t so lucky. Its annual release of spring fashions usually leads to a feeding

frenzy among shoppers, but spring 2009 was different. “We’ve definitely seen a drop-off of this idea of

shopping for entertainment,” says Kimberly Grabel, Saks Fifth Avenue’s senior vice president of

marketing.Stephanie Rosenbloom (New York Times News Service), “Where Have All the Shoppers

Gone?” Fort Worth Star-Telegram, March 18, 2009, 5E. To get buyers in the shopping mood,

companies resorted to different measures. The upscale retailer Neiman Marcus began introducing

more mid-priced brands. By studying customer’s loyalty cards, the French hypermarket Carrefour

hoped to find ways to get its customers to purchase nonfood items that have higher profit margins.

The glum mood wasn’t bad for all businesses though. Discounters like Half-Priced books saw

their sales surge. So did seed sellers as people began planting their own gardens. Finally, what about

those products (Aqua Globes, Snuggies, and Ped Eggs) you see being hawked on television? Their

sales were the best ever. Apparently, consumers too broke to go on vacation or shop at Saks were

instead watching television and treating themselves to the products.Alyson Ward, “Products of Our

Time,”Fort Worth Star-Telegram, March 7, 2009, 1E.

Personal Factors

Personality and Self-Concept

Personality describes a person’s disposition, helps show why people are different, and

encompasses a person’s unique traits. The “Big Five” personality traits that psychologists discuss

frequently include openness or how open you are to new experiences, conscientiousness or how

diligent you are, extraversion or how outgoing or shy you are, agreeableness or how easy you are

to get along with, and neuroticism or how prone you are to negative mental states.

Do personality traits predict people’s purchasing behavior? Can companies successfully target

certain products to people based on their personalities? How do you find out what personalities

consumers have? Are extraverts wild spenders and introverts penny pinchers?

The link between people’s personalities and their buying behavior is somewhat unclear. Some

research studies have shown that “sensation seekers,” or people who exhibit extremely high levels of

openness, are more likely to respond well to advertising that’s violent and graphic. The problem for

firms is figuring out “who’s who” in terms of their personalities.

Marketers have had better luck linking people’s self-concepts to their buying behavior.

Your self-concept is how you see yourself—be it positive or negative. Your ideal self is how you

would like to see yourself—whether it’s prettier, more popular, more eco-conscious, or more “goth,”

and others’ self-concept, or how you think others see you, also influences your purchase behavior.

Marketing researchers believe people buy products to enhance how they feel about themselves—to get

themselves closer to their ideal selves.

The slogan “Be All That You Can Be,” which for years was used by the U.S. Army to recruit

soldiers, is an attempt to appeal to the self-concept. Presumably, by joining the U.S. Army, you will

become a better version of yourself, which will, in turn, improve your life. Many beauty products and

cosmetic procedures are advertised in a way that’s supposed to appeal to the ideal self people seek. All

of us want products that improve our lives.

Lifestyle

If you have ever watched the television show Wife Swap, you can see that despite people’s

similarities (e.g., being middle-class Americans who are married with children), their lifestyles can

differ radically. To better understand and connect with consumers, companies interview or ask people

to complete questionnaires about their lifestyles or their activities, interests, and opinions (often

referred to as AIO statements). Consumers are not only asked about products they like, where they

live, and what their gender is but also about what they do—that is, how they spend their time and

what their priorities, values, opinions, and general outlooks on the world are. Where do they go other

than work? Who do they like to talk to? What do they talk about? Researchers hired by Procter &

Gamble have gone so far as to follow women around for weeks as they shop, run errands, and socialize

with one another.Robert Berner, “Detergent Can Be So Much More,” BusinessWeek, May 1, 2006, 66–

68. Other companies have paid people to keep a daily journal of their activities and routines.

A number of research organizations examine lifestyle and psychographic characteristics of

consumers.Psychographics combines the lifestyle traits of consumers and their personality styles with

an analysis of their attitudes, activities, and values to determine groups of consumers with similar

characteristics. One of the most widely used systems to classify people based on psychographics is the

VALS (Values, Attitudes, and Lifestyles) framework. Using VALS to combine psychographics with

demographic information such as marital status, education level, and income provide a better

understanding of consumers.

MOTIVATION : Following the economic crisis that began in 2008, the sales of new automobiles

dropped sharply virtually everywhere around the world—except the sales of Hyundai vehicles.

Hyundai understood that people needed to feel secure and safe and ran an ad campaign that assured

car buyers they could return their vehicles if they couldn’t make the payments on them without

damaging their credit. Seeing Hyundai’s success, other carmakers began offering similar programs.

Likewise, banks began offering “worry-free” mortgages to ease the minds of would-be homebuyers.

For a fee of about $500, First Mortgage Corp., a Texas-based bank, offered to make a homeowner’s

mortgage payment for six months if he or she got laid off.Andrea Jares, “New Programs Are Taking

Worries from Home Buying,”Fort Worth Star-Telegram, March 7, 2010, 1C–2C.

While achievement may be a goal for many individuals in the United States, consumers in Eastern

cultures may focus more on belongingness and group needs. Marketers look at cultural differences in

addition to individual needs. The importance of groups affects advertising (using groups versus

individuals) and product decisions.

Attitude

Attitudes are “mental positions” or emotional feelings, favorable or unfavorable evaluations,

and action tendencies people have about products, services, companies, ideas, issues, or institutions.

Attitudes tend to be enduring, and because they are based on people’s values and beliefs, they are

hard to change. Companies want people to have positive feelings about their offerings. A few years

ago, KFC began running ads to the effect that fried chicken was healthy—until the U.S. Federal Trade

Commission told the company to stop. Wendy’s slogan that its products are “way better than fast

food” is another example. Fast food has a negative connotation, so Wendy’s is trying to get consumers

to think about its offerings as being better.

An example of a shift in consumers’ attitudes occurred when the taxpayer-paid government

bailouts of big banks that began in 2008 provoked the wrath of Americans, creating an opportunity

for small banks not involved in the credit bailout and subprime mortgage mess. The Worthington

National Bank, a small bank in Fort Worth, Texas, ran billboards reading: “Did Your Bank Take a

Bailout? We didn’t.” Another read: “Just Say NO to Bailout Banks. Bank Responsibly!” The

Worthington Bank received tens of millions in new deposits soon after running these campaigns.

© WorthingtonBank.com

Societal Factors

Situational factors, personal factors, and psychological factors influence what you buy, but only on a

temporary basis. Societal factors are a bit different. They are more outward and have broad influences

on your beliefs and the way you do things. They depend on the world around you and how it works.

Culture

Culture refers to the shared beliefs, customs, behaviors, and attitudes that characterize a society.

Culture is a handed down way of life and is often considered the broadest influence on a consumer’s

behavior. Your culture prescribes the way in which you should live and has a huge effect on the things

you purchase. For example, in Beirut, Lebanon, women can often be seen wearing miniskirts. If you’re

a woman in Afghanistan wearing a miniskirt, however, you could face bodily harm or death. In

Afghanistan women generally wear burqas, which cover them completely from head to toe. Similarly,

in Saudi Arabia, women must wear what’s called an abaya, or long black garment. Interestingly,

abayas have become big business in recent years. They come in many styles, cuts, and fabrics and

some are encrusted with jewels and cost thousands of dollars. To read about the fashions women in

Muslim countries wear, check out the following

article:http://www.time.com/time/world/article/0,8599,1210781,00.html.

Even cultures that share many of the same values as the United States can be quite different.

Following the meltdown of the financial markets in 2008, countries around the world were pressed by

the United States to engage in deficit spending to stimulate the worldwide economy. The plan was a

hard sell both to German politicians and to the German people in general. Most Germans don’t own

credit cards and running up a lot of debt is something people in that culture generally don’t do. Credit

card companies such as Visa, American Express, and MasterCard must understand cultural

perceptions about credit.

Subcultures

A subculture is a group of people within a culture who are different from the dominant culture

but have something in common with one another such as common interests, vocations or jobs,

religions, ethnic backgrounds, and geographic locations. The fastest-growing subculture in the United

States consists of people of Hispanic origin, followed by Asian Americans, and African Americans. The

purchasing power of U.S. Hispanics continues to grow, exceeding $1 trillion in 2010.“Latino

Purchasing Power Now Pegged at $1 Trillion,” Mariowire.com, May 4,

2011,http://www.mariowire.com/2011/05/04/latino-purchasing-power-1-trillion/. Home Depot has

launched a Spanish version of its Web site. Walmart is in the process of converting some of its

Neighborhood Markets into stores designed to appeal to Hispanics. The Supermarcado de Walmart

stores are located in Hispanic neighborhoods and feature elements such as cafés serving Latino

pastries and coffee and full meat and fish counters.Jonathan Birchall, “Wal-Mart Looks to Hispanic

Market in Expansion Drive,” Financial Times, March 13, 2009, 18. Marketing products based on the

ethnicity of consumers is useful but may become harder to do in the future because the boundaries

between ethnic groups are blurring.

Subcultures, such as college students, can develop in response to people’s interests,

similarities, and behaviors that allow marketing professionals to design specific products for them.

You have probably heard of the hip-hop subculture, people who in engage in extreme types of sports

such as helicopter skiing or people who play the fantasy game Dungeons and Dragons.

Social Class

A social class is a group of people who have the same social, economic, or educational status in

society. While income helps define social class, the primary variable determining social class is

occupation. To some degree, consumers in the same social class exhibit similar purchasing behavior.

In many countries, people are expected to marry within their own social class. When asked, people

tend to say they are middle class, which is not always correct. Have you ever been surprised to find

out that someone you knew who was wealthy drove a beat-up old car or wore old clothes and shoes or

that someone who isn’t wealthy owns a Mercedes or other upscale vehicle? While some products may

appeal to people in a social class, you can’t assume a person is in a certain social class because they

either have or don’t have certain products or brands.

Keep in mind that the U.S. market is just a fraction of the world market. The rise of the middle

class in India and China is creating opportunities for many companies to successfully sustain their

products. For example, China has begun to overtake the United States as the world’s largest auto

market.“More Cars Sold in China than in January,” France 24, February 10,

2009, http://www.france24.com/en/20090210-more-cars-sold-china-us-january-auto-

market (accessed October 14, 2009).

Table 3.1 An Example of Social Classes and Buying Patterns

Class Type of Car Definition of Class

Upper-Upper Class Rolls-Royce People with inherited wealth and aristocratic names (the Kennedys, Rothschilds,

Windsors, etc.)

Lower-Upper Class Mercedes Professionals such as CEOs, doctors, and lawyers

Upper-Middle Class Lexus College graduates and managers

Middle Class Toyota Both white-collar and blue-collar workers

Working Class Pontiac Blue-collar workers

Lower but Not the

Lowest

Used

Vehicle People who are working but not on welfare

Lowest Class No vehicle People on welfare

In a recession when luxury buyers are harder to come by, the makers of upscale brands may want

their customer bases to be as large as possible. However, companies don’t want to risk “cheapening”

their brands. That’s why, for example, Smart Cars, which are made by BMW, don’t have the BMW

label on them. For a time, Tiffany’s sold a cheaper line of silver jewelry to a lot of customers. However,

the company later worried that its reputation was being tarnished by the line. Keep in mind that a

product’s price is to some extent determined by supply and demand. Luxury brands therefore try to

keep the supply of their products in check so their prices remain high.

Some companies, such as Johnnie Walker, have managed to capture market share by introducing

“lower echelon” brands without damaging their luxury brands. The company’s whiskeys come in

bottles with red, green, blue, black, and gold labels. The blue label is the company’s best product.

Every blue-label bottle has a serial number and is sold in a silk-lined box, accompanied by a certificate

of authenticity.“Johnnie Walker,” http://en.wikipedia.org/wiki/Johnnie_Walker (accessed October

14, 2009).

Reference Groups and Opinion Leaders

Reference groups are groups (social groups, work groups, family, or close friends) a consumer

identifies with and may want to join. They influence consumers’ attitudes and behavior. If you have

ever dreamed of being a professional player of basketball or another sport, you have an aspirational

reference group. That’s why, for example, Nike hires celebrities such as Michael Jordan to pitch the

company’s products. There may also be dissociative groups or groups where a consumer does not

want to be associated.

Today’s companies are using different techniques to reach opinion leaders. Network analysis using

special software is one way of doing so. Orgnet.com has developed software for this purpose. Orgnet’s

software doesn’t mine sites like Facebook and LinkedIn, though. Instead, it’s based on sophisticated

techniques that unearthed the links between Al Qaeda terrorists. Explains Valdis Krebs, the

company’s founder: “Pharmaceutical firms want to identify who the key opinion leaders are. They

don’t want to sell a new drug to everyone. They want to sell to the 60 key oncologists.”Anita Campbell,

“Marketing to Opinion Leaders,” Small Business Trends, June 28,

2004,http://smallbiztrends.com/2004/06/marketing-to-opinion-leaders.html (accessed October 13,

2009).

Family

Most market researchers consider a person’s family to be one of the most important influences

on their buying behavior. Like it or not, you are more like your parents than you think, at least in

terms of your consumption patterns. Many of the things you buy and don’t buy are a result of what

your parents bought when you were growing up. Products such as the brand of soap and toothpaste

your parents bought and used, and even the “brand” of politics they leaned toward (Democratic or

Republican) are examples of the products you may favor as an adult.

Companies are interested in which family members have the most influence over certain

purchases. Children have a great deal of influence over many household purchases. For example, in

2003 nearly half (47 percent) of nine- to seventeen-year-olds were asked by parents to go online to

find out about products or services, compared to 37 percent in 2001. IKEA used this knowledge to

design their showrooms. The children’s bedrooms feature fun beds with appealing comforters so

children will be prompted to identify and ask for what they want.“Teen Market Profile,” Mediamark

Research, 2003,http://www.magazine.org/content/files/teenprofile04.pdf (accessed December 4,

2009).

Marketing to children has come under increasing scrutiny. Some critics accuse companies of

deliberately manipulating children to nag their parents for certain products. For example, even

though tickets for Hannah Montana concerts ranged from hundreds to thousands of dollars, the

concerts often still sold out. However, as one writer put it, exploiting “pester power” is not always

ultimately in the long-term interests of advertisers if it alienates kids’ parents.Ray Waddell, “Miley

Strikes Back,”Billboard, June 27, 2009, 7–8.

excerpt from “Factors That Influence Consumers’ Buying Behavior”, section 3.1 from the book Marketing Principles