Factors affecting Individuals Buying Decisions

There are several factors affecting individual buying decision and they are as follows:

• Economic Factors
• Personal Factors
• Cultural Factors
• Psychological Factors
• Social Factors

Economic Factors

Economic factor directly affects consumers behavior. Buying decision and willingness to spend depend on the purchasing power. Similarly, purchasing power and willingness to buy depend on the economic condition depends on the income of the other members of the family expectation of income in future, availability of liquid asset, credit facility etc. So, purchasing power and willingness of customers are the main economic forces that affect individual buying decisions.

1. Personal income:
   When the income of the consumer increases the buying capacity of the consumer also increases. In such stage, the consumer will give priority to the luxurious goods and services. But if the income of the consumer is lower than the consumer will give priority to the physical needs than the luxurious goods.
   
   
2. Family income:
   The buying capacity of the consumer is influenced by the family size and family income. Because in a joint family, the rise in individual member's income influences the family income. Therefore, the relationship between the family size or the requirements and the income determines the buying behavior of the family members.
   
   
3. Expected future income:
   The future expectations of the consumer also influence the consumer behavior. If the consumer is expecting week future income then the consumer will spend less income and saves more. In this case. the consumer will prefer to choose physical needs than the luxurious goods.
   
   
4. Price level:
   Market price also affects the individual buying decision. If the market price of a particular goods and service increases then the customers will stop buying that goods and services. Similarly, when the price of that goods decreases the customers will take immediate buying decision.
   
   
5. National Income:
   The national income affects the buying behaviors of the consumers directly or indirectly. For example, the people having high income will pay higher tax to the nation then the income will be spent to the wellbeing of the lower class by the nation. This will have positive effect on buying decision.

Personal Factors

Personal characteristics like age, sex, race, ethnicity, income, family, occupation etc are included in demographic determinants. Personal factors affect the person involved in family decision-making process age and income of a person may affect number and type of information, sources, and time used in a collection of information. It may even affect the type of specific goods used by any person.

1. Age :
   A buyer's age also affects the buying decision. The choice and need of goods and services change according to the age of the buyer. Teenage, youths select the fashionable products, children select toys whereas older customers give importance to quality, durability, and discount on goods and services.
   
   
2. Lifestyle:
   People from same sub-culture, social class, and occupation may have a quite different lifestyle. According to their lifestyle, the choice is also different. So, this affects the behavior of the consumer.
   
   
3. Occupation:
   Occupation influences to a great extent on buying decisions. The occupation of a consumer determines the nature of the products and service demanded by the consumers. For example, the doctor needs medical equipment, engineers need drawing equipment, and students want books.
   
   
4. Family size and family lifecycle:
   The size of the family determines the consumption of the products. A large family has heavy consumption of products than a small family. The consumer's products vary according to the stage of their family life cycle. The consumption of a single bachelor is less than a family.

Cultural Factors

A consumer's buying behavior is also influenced by various cultural factors.

1. Culture:
   Culture is a set of basic values, perceptions, wants and behaviors learned by a member of society from family and other institutions. All these values change the buying attitudes of consumers. Culture is transmitted to the future generation. Culture changes with time. So, the marketer has to adjust to the differences in order to get better results in marketing.
   
   
2. Sub-culture:
   The sub-culture is the sub-division of national culture based on some homogeneous characteristics such as language, ethnicity, race, region etc. The sub-cultures influence greatly on the consumer preferences and their behavior.

Social Factors

A consumer's buying behavior is also influenced by various social groups and social class.

1. Family:
   The family members influence the purchase decision. The members of the family play the role of initiator, influencer, decider, purchaser and user in the buying process. Therefore, the type of role assumed by a family member and the purchase decision varies across families, situations, and product.
   
   
2. Reference groups:
   Reference groups are any person or group that serves as a point of comparison or reference for an individual in the formation of either general or specific values, attitudes or behavior. Influence of reference group on consumer buying decision depends on the nature of the person, type of product and other social factors.
   
   
3. Opinion Leaders:
   Opinion leaders play a key role in influencing the buying behavior of their followers. The opinion leader sets a trend and pattern for others to follow in given situation. So, the products used by the leader is also used by all the entire group of followers behind them.
   
   
4. Social class and caste class:
   Buying behavior of an individual is also influenced by the social class and the caste to which they belong. Social class is relatively permanent and homogeneous division of a society. Caste is the group of membership by birth. The variations in class and caste result in differences in choice of stores, choice of products and brands and frequency of buying.

Psychological Factors

Psychological factors like motivation, perception, learning , beliefs, and attitudes influence the consumer behavior considerably. Psychological factor within the individual determines their consumption behavior.

1. Perception:
   The action of a person is influenced by his/her perception of the situation. Different people perceive the same situation with the same motivation differently. This different perception happens because of three perceptual processes i.e. selective attention, selective distortion, and selective retention.
   
   
2. Learning:
   Learning is the change in behavior of person arising from experience. It is the change in the behavior which occurs as a result of practice. The mind of a person thinks and decides based on the past experience and the body acts accordingly.
   
   
3. Beliefs:
   Belief is the conception built up by the individuals about any goods, services, brand, person, company or organization. Generally, everyone makes their buying decisions according to their belief. So, their behavior is mostly affected by their belief
   
   
4. Attitude:
   Attitude is a state of mind or feeling and it interacts with perception, thinking, feeling and reasoning. Knowledge of consumers attitudes provides an idea for improvement of strategies of the business firm. It is defined as " a learned predisposition to respond in a consistently favorable or unfavorable manner to a stimulus."
   
   
5. Motivation:
   Motivation refers to an activated state within a person that leads to goal-directed behavior. According to Abraham Maslow, the first theory of motivation is based on needs.
   According to him, the needs are arranged in a hierarchy, from the most pressing to the least pressing. He has listed five categories of needs. These are discussed below:

• Physiological needs are the basic needs for survival and include the need for food, drink, shelter, sleep and sex. These needs relate the survival; and maintenance of human life.
• Safety needs include the need for physical, economic and social security. Everyone wants job security, protection against dangers, the safety of property etc.
• Social needs include the need for affection, relations between individuals, and a place in the family and society.
  
• Esteem needs are associated with a desire to achieve high status among one's peers and includes the need for mastery, reputation, prestige and high social image.
• Self-actualization is the desire to achieve the highest point of one's capabilities and includes a desire to travel, known and understand.

References:

Koirala, Dr. Kundan Dutta. Elementary Marketing. Kathmandu: Buddha Academic Publishers and Distributors Pvt. Ltd, 2014.

Thapa, Gopal, Dipendra K. Neupane and Dilli Raj Mishra. Introduction to Marketing. Kathmandu: Asmita Books Publishers and Distributors (P) Ltd., 2014.