5 Factors Affecting the Dynamics of Consumer Behavior in 2021

Marketing is all about Consumer Behavior. The better you understand consumers and how they behave, the better you can reach them with your products and services.

Consumer Behavior, by definition, is the study of how consumers behave in a given environment, the factors that influence their specific behavior, and the journeys they go through before making a purchase activity. This blog will discuss five factors that influence consumer behavior and how they will change in the near future. These factors are external and internal. While social and cultural factors are purely external, psychological factors are completely internal.

Psychological factors

The factors included in the Psychological Factors are Attitude, Perception, Motivation, and Learning.

Attitude:

Consumer attitudes and beliefs towards your products will play a key role in your branding and will be a determining factor in the success of your marketing campaigns. If the product doesn't match their attitude, you'll have a hard time converting that customer. The 2021 vaccination effort shows us how anti-vaxxers are creating problems in the vaccination process in many countries. They believe that they are being coerced into the vaccine, preventing them from receiving and adopting it. You need to work more on a conscious level to jump over attitude barriers.

Perception:

We humans are biased creatures, and without our knowledge, every decision we make, our bias plays a role in it. The same thing happens when a consumer makes a purchase or goes through a buying decision-making process. Thus perception becomes an important consideration when studying consumer behavior. Perception is the way customers collect and assimilate information and make their impression. The way you work to create awareness for your product may have a different impact on your customers depending on their perception.

Motivation:

The level of motivation makes or breaks a sale. Their needs can trigger motivation. These needs can exist at any level in Maslow's Hierarchy. As you curate your product or content, try to identify the need to better understand their motivational level.

In the coming days, people will be more concerned about buying health-related products like Medicines, Health Checkups, Insurance, etc. So trying to link your product (if you can) with health sector products as motivation to buy will increase a lot. folds.

Study:

After your consumers use your product or related products, the user experience leaves an impression on them about your product that determines whether they will repurchase or not, whether they will promote it by word of mouth or not.

There are other ways to learn about your product, perhaps through advertising, organically through search and various courses. There must be good content both online and offline to help your consumer's learning process.

Social factors

Social factors are part of the external factors that influence consumer behavior. Family, Reference Group, and Individual Roles and Status make up Social Factors.

Family

Families play an important role in customer basket size and basket portfolio. After the pandemic, people will prefer to live with their families and choose products that can be consumed with their families. Bigger cars, family insurance, homes and real estate may be critical areas that may see an increase in sales in the coming days.

Reference group

Reference groups are groups with which consumers identify. It can be a friend, colleague, neighbor. Often they have similar buying behavior and influence each other in their decision-making journey.

Role and Status

A person's buying behavior is determined by his position in society, his office, or among his group. Someone taller up the ladder may prefer to buy a product that separates them from the rest. A person who is famous for his health and fitness can avoid buying unwanted items to avoid misleading his followers.

Cultural Factor

Culture, Subculture and Social Class influence consumer behavior and, in hindsight, become very important in shaping many psychological and personal factors.

Culture and Subculture

Culture and Subculture are defined ways in which a group of people have the same characteristics and behave similarly, have ideas about morality, laws, ethics, wants, needs, etc. Thus, culture shapes the way people think.

Subcultures exist within this culture and differ slightly from other subcultures while exhibiting most of the similar identifying characteristics of the culture to which they belong. For example, certain cultures may have certain food habits that they feel comfortable doing. Therefore, before entering any market, researching their culture is very important and saves a lot of costs before launching a product.

Social class

Social class refers to the socioeconomic conditions of consumers in geography. There are mainly seven socioeconomic groups viz.

Top
Top Bottom
Upper Middle Class
Middle class
Lower Middle Class
Bottom up
Bottom Down

Based on which class they belong to, your consumers will behave differently. While the upper class may prefer exclusivity, high-end luxury products, indulgent service, the middle class can choose VFM products, while the lower class can choose to save on their consumption. The Middle Class may consider overspending in the years to come on health, comfort and safety, exclusive to the Upper Class. They will also make panic buying and stockpiling once there is an economic lockdown. Lower classes in rural areas contribute more sales volume to smaller SKUs at lower prices. 4A rural marketing model would benefit from selling to these classes.

Personal Factor

Age, Income, Occupation, and Lifestyle are personal factors that influence consumer behavior. These are internal factors and do not depend on external factors such as Social, Cultural or Economic Factors.

Age

As a person ages from infancy to senile dementia, at each stage, preferences for products change. For example, while children may prefer sweet candy and brighter clothes, older family members may like to eat healthier and wear delicately colored clothes.

Income

With the increase in disposable income, the amount of consumption also increases. Therefore, a person with high income may prefer to choose more services over products. This direct proportionality helps marketers categorize the consumer base by their income and develop products for each income group.

Occupation

In addition to income levels, the work consumers do also affects their consumer behavior. A person with a sedentary job may prefer to invest in healthy food, formal wear, and a laptop. On the other hand, someone who needs to travel or do a lot of manual work can choose weather-friendly clothing and sturdy devices and gadgets over fragile and luxurious ones.

Lifestyle

Lifestyle refers to the way an individual decides to live his life in society. Based on these choices, they can choose to buy the product that best suits their lifestyle. While some may choose to live their life to the fullest and invest in parties and fun, others who choose to have a peaceful life may spend more to perfect their room.

Economic factors

Economic factors that play an important role in shaping consumer behavior are personal income, family income, income expectations, savings, liquid assets, and consumer credit.

Family income

Apart from an individual's personal income, their family income also plays an important role in the types of products and services or consumption and the decision-making journey that a person goes through before buying them. Now that the pandemic has forced people to stay indoors with their families, they are more likely to think about their family as a whole, the idea of individualism may get watered down. So family income can also be the basis of segmentation.

Income Expectations

If your consumers expect an increase in income, they are likely to improve their lifestyle and spend on luxury goods and services. On the other hand, he will reduce his expenses and his lifestyle if there is a possibility of a decrease in income in the future.

Savings

The decision to save more for future expenses or emergencies can lead your customers to reduce their current costs and choose more value for money and service. If they have to make emergency expenses, they will be conservative in their spending until they can regain their financial footing on their savings.

Liquid Asset

The more assets one has in banks, stocks and other easily liquidated assets, the more spending on luxury and convenience.

Consumer credit

With more credit given to customers, purchase intention increases. Offers such as no-fee EMI, accessible credit, and pay options then encourage consumers to take advantage of the interest while enabling them to enjoy the product now.

Other economic factors such as Inflation, Business Cycle, Interest Rates etc., also influence the buying behavior of consumers as they affect the demand and supply in the market at the macro level.