Key Influences on Consumer Decision Making
While the decision-making process appears quite standardized, no two people make a decision in exactly the same way. As individuals, we have inherited and learned a great many behavioral tendencies: some controllable, some beyond our control. Further, the ways in which all these factors interact with one another ensures uniqueness.
Although it is impossible for a marketer to react to the particular profile of a single consumer, it is possible to identify factors that tend to influence most consumers in predictable ways. The factors that influence the consumer problem-solving process are numerous and complex.
In the first 5 chapters of this book, we examined the internal factors that influence consumer decision making, including perception, learning, motivation, personality, and attitudes. In the previous chapter we identified the different emerging trends that also influence consumer decision making. In these final two chapters of this book, we explore the external factors that influence consumer decision making, which include demographic, social, situational, and cultural.
As depicted in the diagram below, cultural, social, individual, and psychological factors influence consumers at each stage of the decision making process: this means that marketers have a responsibility to understand the impact (and consequence) of their messaging on both the individual consumer and the greater society.
There are many internal as well as external factors that independently and collectively influence our decisions as consumers. These influences start at a very young age and continue to resonate with us throughout adulthood. Whether we are exploring the internal or external factors, it is important to recognize that our attitudes and behaviours at each stage of the consumer process has been shaped by years of learning, perceptions, socialization, experiences.
An important set of factors that should not be overlooked in attempting to understand and respond to consumers is demographics. Such variables as age, sex, income, education, marital status, and mobility can all have significant influence on consumer behavior. People in different income brackets also tend to buy different types of products and different qualities. Thus, various income groups often shop in very different ways. This means that income can be an important variable in defining the target group. Many designer clothing shops, for example, aim at higher-income shoppers, while a store like Kmart appeals to middle-and lower-income groups.
A is a group of people who have the same social, economic, or educational status in society (“WordNet,” n.d.). 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 behaviour. 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.
In a recession when luxury buyers may be 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 (“Teen Market…,” 2009).
A consumer’s family has a major impact on attitude and behaviour. The interaction between partners/spouses and the number and ages of children (if any) in the family can have a significant effect on buying behaviour.
One facet in understanding the family’s impact on consumer behaviour is identifying the decision maker for the purchase in question. In some cases, one partner/spouse is more dominant than the other, and even more so over the children. And in others a joint decision is made between partners/spouses. The store choice for food and household items may fall to one spouse/partner while purchases that involve a larger sum of money, such as a refrigerator, a joint decision is usually made. The decision on clothing purchases for teenagers may be greatly influenced by the teenagers themselves. Thus, marketers need to identify the key family decision maker for the product or service in question.
Most market researchers consider a person’s family to be one of the most important influences on their buying behaviour. 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 are examples of the products you may favour 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 per cent) of nine- to seventeen-year-olds were asked by parents to go online to find out about products or services, compared to 37 per cent 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…,” 2009).
Another aspect of understanding the impact of the family on buying behaviour is the (“FLC”). Most families pass through an orderly sequence of stages. These stages can be defined by a combination of factors such as age, marital status, and parenthood.
You have probably noticed that the things you buy have changed as you age. Think about what you wanted and how you spent five dollars when you were a child, a teenager, and an adult. When you were a child, the last thing you probably wanted as a gift was clothing. As you became a teen, however, cool clothes probably became a bigger priority. Don’t look now, but depending on the stage of life you’re currently in, diapers and wrinkle cream might be just around the corner.
If you’re single and working after graduation, you probably spend your money differently than a newly married couple. How do you think spending patterns change when someone has a young child or a teenager or a child in college? Diapers and day care, orthodontia, tuition, electronics—regardless of the age, children affect the spending patterns of families. Once children graduate from college and parents are empty nesters, spending patterns change again.
Empty-nesters and baby boomers are a huge market that companies are trying to tap. Ford and other car companies have created “aging suits” for young employees to wear when they’re designing automobiles. The suit simulates the restricted mobility and vision people experience as they get older. Car designers can then figure out how to configure the automobiles to better meet the needs of these consumers.
Age Cohorts & Generations
There are four consumption cohorts, or generations, who are active in today’s consumer culture; Baby Boomers, Generation X, Generation Y (or Millennials), and Generation Z. Let’s break down each one and examine some similarities and differences, keeping in mind, these are generalizations and there are exceptions within each generation.
- Baby Boomers: born between 1946 and 1964. The huge wave of baby boomers began arriving in 1946, following World War II, and marketers have been catering to them ever since. What are they like? Sociologists have attributed to them such characteristics as “individuality, tolerance, and self-absorption.” In the United States, there are seventy million of them, and as they marched through life over the course of five decades, marketers crowded the roadside to supply them with toys, clothes, cars, homes, and appliances—whatever they needed at the time. They’re still a major marketing force, but their needs have changed: they’re now the target market for pharmaceutical products, mobility aids, retirement investments, cruises, and retirement communities. Baby Booms have a high amount of , are affluent, and more “tech savvy” than many might realize. For marketers, the most effective way to reach Baby Boomers is through television advertisements, email marketing, paid search, and Facebook advertisements.
- Generation X: born between 1965 and 1981. Because birth rates had declined by the time the “Gen X” babies first arrived in 1965, this group had just one decade to grow its numbers. Thus, it’s considerably smaller (seventeen million) than the baby-boomer group, and it has also borne the brunt of rising divorce rates and the arrival of AIDS. Experts say, however, that they’re diverse, savvy, and pragmatic and point out that even though they were once thought of as “slackers,” they actually tend to be self-reliant and successful. At this point in their lives, most are at their peak earning power and affluent enough to make marketers stand up and take notice.
- Generation Y (“Millennials”): born between 1982 and 1997. When they became parents, baby boomers delivered a group to rival their own. Born between 1976 and 2001, their sixty million children are sometimes called “echo boomers” (because their population boom is a reverberation of the baby boom). They’re still evolving, but they’ve already been assigned some attributes: they’re committed to integrity and honesty, they’re family oriented and close to parents, ethnically diverse and accepting of differences, upbeat and optimistic about the future (although the troubled economy is lessening their optimism), education focused, independent, and goal oriented. They also seem to be coping fairly well: among today’s teens, arrests, drug use, drunk driving, and school dropout rates are all down. Since many consumers in this bracket may still be paying off student loans, Generation Y’s might be less than other generational groups of consumers. Generation Ys are being courted by carmakers. Global car manufacturers have launched a number of 2012 cars designed to cater to the members of Generation Y. Advertisers are also busy trying to find innovative ways to reach this group, but they’re finding that it’s not easy. Generation Ys grew up with computers and other modes of high technology, and they’re used to doing several things at once—simultaneously watching TV, texting, and playing games on the computer. As a result, they’re quite adept at tuning out ads. Try to reach them through TV ads and they’ll channel-surf right past them. You can’t get to them over the Internet because they know all about pop-up blockers. In one desperate attempt to get their attention, an advertiser paid college students fifty cents to view thirty-second ads on their computers. Advertisers keep trying, because Generation Y is big enough to wreck a brand by giving it a cold shoulder.
- Generation Z (“Digital Natives”): born between 1997 and today. Generation Z has never known a world before technology. They have grown up in an “always on” world where technology is readily available and used on a regular basis. Technology has been utilized as a babysitter by many parents of this generation and it is also present in the classroom. This constant access to technology makes Generation Z extremely tech savvy but has also changed behaviour and lifestyle. Whether or not these behavioural and lifestyle changes will carry on into their adulthood is yet to be determined. Generation Z is starting to enter into the workforce with the oldest members turning 24-years-old in 2021.
How has marketing to Gen Z changed over the last two decades? Student explore how changes in society and culture have been reflected in the marketing and advertising towards Millennials. Created by KPU students Aidan Maurice Richard and John Donahoe. Click on the arrow on the right to pass through the timeline.
- The graphic of the “Consumer Decision Making Process: Factors Influencing Consumer Decision Making” is by Niosi, A. (2021) which is licensed under CC-BY-NC-SA and is adapted from “Buyer Behaviour” in Introduction to Business by Rice University.
- The graphic of the “Family Lifecycles: Consumption Preferences by Stage” is by Niosi, A. (2021) which is licensed under CC-BY-NC-SA and is adapted from “Introducing Marketing” [PDF] by John Burnett which is licensed under CC BY 3.0.
- The opening two paragraphs; the sections under “Demographic Influences,” “Family”; the first paragraph under “Family Lifecycle” and the “Family Lifecycle” graphic (edited) are adapted from Introducing Marketing [PDF] by John Burnett which is licensed under CC BY 3.0.
- The section under “Age Cohorts & Generations” (edited) is adapted from “Generation Effects and Consumer Behaviour“. Introduction to Business, created by Lumen Learning which is licensed under CC BY.
- The section under “Social Class” (including the table in the shaded box; excluding the H5P Content); the “Marketing Context: Influence & the family”; and, the second, third, and fourth paragraphs under “Family Lifecycle” are adapted from Principles of Marketing by University of Minnesota which is licensed under a Creative Commons Attribution-NonCommercial-ShareAlike 4.0 International License.
- The first paragraph under “Age Cohorts & Generations” is adapted from “Workforce Generations“. Authored by: Freedom Learning Group. Provided by: Lumen Learning which is licensed under CC BY: Attribution.
Teen Market Profile. (2009, Dec. 4). Mediamark Research. http://www.magazine.org/content/files/teenprofile04.pdf.
WordNet. (n.d.). Princeton University. http://wordnetweb.princeton.edu/perl/webwn?s=social+class&sub=Search+WordNet&o2=&o0=1&o7=&o5=&o1 =1&o6=&o4=&o3=&h=.
A term used to describe groups of people who have the same socio-economic status within society. Social class may be measured using income, education, and profession; however, classifications can often be incorrect because indicators might be misleading (e.g. someone with high school education can be a high income earner).
The family lifecycle represents the various stages we pass through from early adulthood to retirement. At each stage of the lifecycle consumer preferences are defined by different needs and wants and influenced by different forces.
Disposable income represents the amount of money we have left over to invest, save, or spend, after paying personal income taxes. Seniors and retirees typically have more disposable income due to paying lower personal income taxes. Discretionary income is derived from disposable income.
Discretionary income represents the amount of money we have left over to invest, save, or spend, after paying personal income taxes and necessities. Young adults often have to pay necessities like student loans and credit card debts, but also may pay less taxes, all of which effects their discretionary income. Discretionary income is different than disposable income because it takes necessary expenses into consideration.