Factors affecting consumer buying decisions

As discussed earlier, majority of companies' marketing policies are based on consumer behaviour and the factors that influence purchasing decisions. Currently the main question in any market research is how consumers react to the different marketing stimuli applied by businesses. A firm that understands how consumers react to various product features, prices, or advertising, will have a huge advantage over competitors. For this reason businesses spend so much time investigating the relationship between marketing stimuli and consumer responses. However, consumers do not make their decisions in isolation. Lamb (2004) differentiates four main groups of factors that have an impact on consumer decision making process; they are cultural, social, individual, and psychological factors. Most of the time, these factors are beyond the control of marketers, but still should be taken into account.

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Figure 6: Factors infuencing consumer decision making process

Source: Lamb, (2004)

Cultural factors

Culture, subculture and the social status of the customer plays the most important role in consumer behaviour. According to Aaker (1996), some of the elements of a culture are values, perceptions and needs, and they are embedded in a person by his family. However, culture influences not only intrapersonal components such as values and attitudes, but also the processes of socialization. Within certain social groups there are some subcultural groups which determine the patterns of consumer behavior of their members. People unite on the basis of national, religious, racial features, or geographical region. Differences between countries are evident in the ethnic composition of the population (Malhotra, 2006). Each ethnic group has specific needs and purchasing habits. Therefore, a significant number of businesses adapt their production based on those ethnical differences. Another important component of culture is a social class – group of people whose members have approximately the same interests, behavior, and values. Members of social classes have certain common preferences in their choice of different products and brands. Some businesses take advantage of this fact to focus their attention on meeting the needs of a particular class.

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Social factors

In addition to culture, consumer behavior is influenced by social factors such as reference groups, family, and opinion leaders. Reference groups are able to influence not only persons’

behavior but also their attitude toward something or someone. For example, in order to save time, people tend to ask their friends or family (one of the most influential reference groups) about the product they wish to purchase. Thus, consumer’s decisions can reflect the impact of reference groups and family.

Individual factors

Individual characteristics such as age and life cycle stage of the family, work, economic situation, lifestyle, character traits and self-esteem also have a significant impact on consumer's decision (Kotler, 2016). Throughout life, a person acquires a variety of goods and services. For example, a child probably does not know much about smoking and does not think to try it, an adult seeks to try a variety of products and thus can start smoking, and in old age he can meet health issues and quit. The consumption structure of an individual also depends on what stage of the life cycle his family is at. Studying certain personality types, another element of individual characteristics, allows businesses for determination and prediction of relatively constant and consistent reactions of consumers to environmental influences (Oke et al., 2016)

Psychological factors

Motivation, perception, learning, and beliefs & attitudes are four psychological factors by means of which the consumer engages with the society. By discovering these features companies are able to better meet customer needs (Oke et al., 2016):

- Motivation: most of the customer needs do not require immediate fulfillment. A need becomes a motive when it forces a person to act, and its satisfaction reduces psychological tension.

- Perception: very often people perceive the same situation differently. As a result, the consumer does not always see or hear the signals sent to him by marketers.

- Learning: by doing some processes person learns certain knowledge, thus learning can be seen as certain changes in human behavior that occur as person accumulates experience.

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- Beliefs and attitudes are formed through actions and learning, and thus influence consumer behavior. Firms are very interested in customers' beliefs about products and services, as it helps them in creating images of products and brands. Based on beliefs, people take actions (Kotler, 2015).

The evidence suggests that decision on use of tobacco depends on the factors explained above. However, research did not prove a certain impact of each factor on the decision.

Supposedly, interaction of all factors allows influencing the process of decision-making on tobacco use (U.S. Department of Health and Human Services, 1998); all together, factors create either barriers for smoking or facilitate it (Mohammadnezhad et al., 2015). For example, use of tobacco can be determined by cultural factors such as traditional tobacco use or acculturation (U.S. Department of Health and Human Services, 1998), at the same time, it can be influenced by reference group’s attitude towards smoking, social norms or individual perception.

According to the above explanation, we can conclude that businesses should optimize their marketing mix by identifying and using the most significant factors or their mix, affecting the decision-making process of the consumer. This optimization should take place at each stage of the decision-making process which will be explained in the following chapter.