Module II. Consumer Behaviour Determinants

Module No.2: Consumer Behaviour Determinants 12 Hours

Factors influencing Consumer Behaviour-Internal factors-Needs & Motivations, Perception, Personality, Lifestyle, Values, Learning, Memory, Beliefs & Attitudes. External factors - Culture, Subculture, Social Class, Reference Groups, Opinion leadership, dynamics of opinion leadership process, The Motivation behind opinion leadership, Family, Person’s Age, Life cycle stage, Occupational and economic circumstances.

1. Needs and Motivation

Needs and motivation form the foundation of consumer behaviour. A need is a state of felt deprivation, while motivation is the inner driving force that directs a person to act in order to satisfy that need. When a need becomes strong enough, it creates tension, and this tension motivates the consumer to engage in goal-oriented behaviour.

One of the most widely accepted frameworks is Maslow’s Hierarchy of Needs, which classifies human needs into five levels: physiological, safety, social, esteem, and self-actualization. Consumers generally attempt to satisfy lower-level needs before progressing to higher-level needs. For example, a person first ensures basic necessities like food and shelter before seeking recognition or personal growth.

Maslow's hierarchy of needs is a psychological theory that organizes human needs into a five-tier pyramid, from basic physiological needs to self-actualization, guiding motivation and personal growth.

Overview of the Theory

Maslow’s hierarchy of needs, proposed by Abraham Maslow in 1943, is a framework for understanding human motivation. It suggests that people are motivated to fulfill basic needs before moving on to higher-level needs. The hierarchy is often depicted as a pyramid, with the most fundamental needs at the bottom and the highest-level needs at the top 

The Five Levels of Needs

Physiological Needs: These are essential for survival, including air, water, food, sleep, and shelter. Without satisfying these needs, higher-level motivations cannot be effectively pursued 

Safety Needs: Once physiological needs are met, individuals seek security and stability. This includes personal safety, financial security, health, and protection from harm 

Love and Belongingness: Humans have an emotional need for connection, including friendships, family, intimacy, and being part of a supportive community 

Esteem Needs: This level involves the desire for self-respect, recognition, status, and appreciation from others. Meeting these needs fosters confidence and a sense of achievement 

Self-Actualization: At the top of the hierarchy, self-actualization represents the drive to realize one’s full potential, pursue personal growth, creativity, and self-fulfillment

Needs are basic human requirements (physical, social, psychological).

Motivation is the internal drive that directs behaviour toward satisfying these needs.

Types of Needs:

1. Physiological (food, shelter)
2. Safety (security, stability)
3. Social (belongingness, love)
4. Esteem (status, recognition)
5. Self-actualization (personal growth)

Motivation can also be understood through theories such as McClelland’s Theory of Needs, which emphasizes achievement, affiliation, and power. In the marketplace, consumers are often motivated by a combination of rational motives (price, quality, utility) and emotional motives (status, pride, affection).

Motivation Theories:

• Maslow’s Hierarchy of Needs
• Herzberg’s Two-Factor Theory (limited application in consumer context)
• McClelland’s Needs Theory (achievement, affiliation, power)

Key Idea: Unfulfilled needs create tension → leads to motivated buying behaviour.

Example: A student buys a branded smartphone not only for communication (functional need) but also for status (esteem need).

Thus, marketers aim to identify dominant consumer motives and position their products accordingly. For instance, luxury brands appeal to esteem needs, while insurance products appeal to safety needs.

2. Perception

Perception is the process through which individuals select, organize, and interpret sensory information to create a meaningful understanding of the environment. It is important because consumers do not respond to reality directly, but to their perception of reality.

The perceptual process involves three stages: exposure, where the consumer encounters a stimulus; attention, where the consumer focuses on certain stimuli; and interpretation, where meaning is assigned. Due to the vast amount of information available, consumers engage in selective perception, which includes selective attention, selective distortion, and selective retention.

Selective attention means consumers notice only certain stimuli. Selective distortion refers to interpreting information in a way that supports existing beliefs. Selective retention involves remembering information that aligns with one’s attitudes and forgetting the rest.

For marketers, understanding perception is crucial because even the best product will fail if consumers perceive it negatively. Effective advertising, packaging, and branding aim to create favourable perceptions in the consumer’s mind.

Perception is the process by which individuals select, organize, and interpret stimuli to form a meaningful picture of the world.

Perceptual Process:

    Exposure → Attention → Interpretation

Key Concepts:

• Selective Attention (not all ads are noticed)
• Selective Distortion (interpretation based on beliefs)
• Selective Retention (remembering preferred information)

Implication: Marketers must design messages that stand out and align with consumer beliefs.

Example: Two consumers see the same advertisement but interpret it differently based on past experiences.

3. Personality

Personality refers to the unique and consistent patterns of thinking, feeling, and behaving that characterize an individual. It influences how consumers respond to marketing stimuli and make purchasing decisions.

Personality refers to unique psychological characteristics that lead to consistent responses to the environment.

Traits influencing behaviour:

• Confidence
• Sociability
• Risk-taking
• Innovativeness

Theories Used:

• Trait Theory (measurable personality characteristics)
• Psychoanalytic Theory (Freudian approach—less practical in marketing)

Brand Personality:

    Consumers often choose brands that match their own personality.

Example: Extroverted individuals may prefer bold, vibrant brands.

Personality traits such as introversion, extroversion, aggressiveness, sociability, and openness to experience play a significant role in shaping consumer preferences. The trait theory of personality is commonly used in marketing because it allows measurement and categorization of individuals based on specific characteristics.

An important concept is brand personality, where brands are given human-like traits. Consumers tend to choose brands that match or enhance their own personality. This creates emotional attachment and brand loyalty.

For example, a consumer who perceives themselves as adventurous may prefer brands that are associated with excitement and innovation. Thus, marketers design brand images that resonate with target consumers’ personalities.

4. Lifestyle

Lifestyle refers to a person’s pattern of living as expressed in their activities, interests, and opinions (AIO framework). It provides a broader view of consumers beyond demographic factors such as age or income.

Lifestyle analysis helps marketers understand how consumers spend their time and money. The AIO framework examines:

• Activities (work, hobbies, social events)
• Interests (fashion, food, media)
• Opinions (beliefs about society, politics, business)

Another important tool is the VALS (Values and Lifestyles) classification, which segments consumers based on psychological characteristics and resources.

Helps marketers segment markets beyond demographics.

Example: A health-conscious lifestyle leads to purchasing organic or fitness-related products.

Lifestyle plays a crucial role in product choice and brand preference. For instance, a fitness-oriented individual is more likely to purchase health foods, gym memberships, and sportswear. Marketers use lifestyle segmentation to design targeted marketing strategies.

5. Values

Values are deeply held beliefs about what is desirable, acceptable, or important in life. They serve as guiding principles that influence attitudes, judgments, and behaviour.

Values are deeply held beliefs about what is desirable, right, and important.

Types:

• Personal values (honesty, freedom)
• Social values (equality, justice)
• Cultural values (traditions, norms)

Values can be classified into personal values (honesty, ambition), social values (equality, justice), and cultural values (traditions, customs). Unlike attitudes, values are relatively stable and long-lasting.

Characteristics:

• Relatively stable over time
• Influence attitudes and behaviour

Relevance:

Ethical consumption, sustainability, and social responsibility are value-driven.

Example: A consumer avoids products tested on animals due to ethical values.

In consumer behaviour, values shape preferences and decision-making processes. With increasing awareness, many consumers are now guided by ethical and environmental values, leading to the rise of green marketing and socially responsible consumption.

For example, consumers who value sustainability may prefer eco-friendly products even if they are more expensive. Marketers must align their offerings with consumer values to build trust and long-term relationships.

6. Learning

Learning refers to a relatively permanent change in behaviour resulting from experience. It plays a crucial role in shaping consumer behaviour, as consumers learn from past purchases, advertising, and social interactions.

There are three main types of learning:

Classical conditioning: Learning through association (e.g., associating a brand with pleasant music or imagery).

Operant conditioning: Learning through rewards and punishments (e.g., discounts encouraging repeat purchases).

Cognitive learning: Learning through thinking, reasoning, and problem-solving.

Key elements of learning include drive, cues, response, and reinforcement. When consumers receive positive reinforcement, they are more likely to repeat the behaviour, leading to brand loyalty.

Marketers use learning principles to influence consumer behaviour through advertising, product experience, and promotional strategies.

Marketing Relevance:

Brand loyalty is built through positive reinforcement.

Example: Discounts and rewards encourage repeat purchases.

7. Memory

Memory refers to the process by which information is encoded, stored, and retrieved. It plays a critical role in consumer decision-making, as past experiences and knowledge influence current choices.

Memory is broadly divided into:

Short-term memory: Holds information temporarily.

Long-term memory: Stores information for extended periods.

The process involves encoding (input of information), storage (retention), and retrieval (recalling information when needed). Effective marketing strategies aim to enhance brand recall and recognition by using repetition, emotional appeals, and distinctive cues.

Strong brand recall leads to higher purchase likelihood.

Example: A catchy jingle helps consumers remember a brand easily.

For example, memorable advertisements, slogans, and logos help consumers retain brand information and recall it at the time of purchase.

8. Beliefs and Attitudes

Beliefs are descriptive thoughts that a consumer holds about a product or brand, while attitudes are learned predispositions to respond favourably or unfavourably toward an object.

Beliefs are descriptive thoughts about something.

Attitudes are consistent evaluations, feelings, and tendencies toward an object.

Attitudes are typically explained using the ABC model:

• Affective component (feelings)
• Behavioral component (actions or intentions)
• Cognitive component (beliefs or knowledge)

Characteristics:

• Attitudes are relatively stable but can change with strong influence.
• Difficult to change once formed.

Attitudes are relatively stable but can change over time through new information or experiences. Changing consumer attitudes is challenging but possible through persuasive communication, product improvements, or repositioning strategies.

Marketers attempt to influence beliefs and attitudes by highlighting product benefits, correcting misconceptions, and associating products with positive emotions.

For example, if a consumer believes a brand is reliable and develops a positive attitude toward it, they are more likely to make repeat purchases and recommend it to others.

Strategies for Marketers:

• Change beliefs
• Change importance of attributes
• Add new attributes

Example: A consumer believes a brand is reliable and thus develops a positive attitude, leading to repeat purchase.

External Factors Influencing Consumer Behaviour

1. Culture

Culture is one of the most fundamental determinants of consumer behaviour. It refers to the set of basic values, beliefs, norms, and customs learned by members of a society. These cultural elements shape the way individuals perceive needs, make decisions, and behave as consumers.

Culture is learned through family, educational institutions, religion, and social interactions. It is not static; rather, it evolves over time. Culture influences consumption patterns by defining what is acceptable, desirable, or prestigious within a society.

Key characteristics of culture include:

• It is learned and not inherited.
• It is shared among members of society.
• It is dynamic and adaptive.
• It influences attitudes, values, and behaviour.

For example, in India, cultural emphasis on festivals like Diwali or Christmas significantly increases demand for clothing, sweets, and gifts. Marketers often design campaigns aligned with cultural values and traditions to attract consumers.

2. Subculture

A subculture is a group of people within a larger culture who share distinct values, beliefs, or experiences. Subcultures provide more specific identification and socialization for their members.

Subcultures can be based on:

• Religion (Hindu, Muslim, Christian communities)
• Region (South Indian, North Indian)
• Language (Kannada-speaking, Tamil-speaking)
• Age (youth culture, elderly consumers)

Each subculture has unique preferences, consumption habits, and buying patterns. Understanding subcultures helps marketers segment markets more effectively and design products suited to specific groups.

For example, food preferences vary significantly across regions in India. A company selling packaged food products must adapt its offerings according to local tastes and cultural practices.

3. Social Class

Social class refers to relatively permanent and ordered divisions in a society whose members share similar values, interests, income levels, education, and lifestyles. It influences purchasing power as well as consumption patterns.

Social class is typically determined by factors such as:

• Income
• Occupation
• Education
• Wealth

Characteristics of social class:

• Members of the same class tend to exhibit similar behaviour.
• It influences product choice, brand preference, and spending habits.
• It is dynamic; individuals can move between classes.

Consumers from different social classes have different buying behaviour. For instance, upper-class consumers may focus on luxury, exclusivity, and brand image, while middle-class consumers may emphasize value for money and durability.

Marketers often position products based on target social class segments.

4. Reference Groups

Reference groups are groups that influence an individual’s attitudes, opinions, and behaviour. They serve as points of comparison or reference for forming beliefs and making decisions.

Types of reference groups:

1. Primary groups (family, close friends)
2. Secondary groups (colleagues, associations)
3. Aspirational groups (groups one wishes to join)
4. Dissociative groups (groups one wants to avoid)

Reference groups influence consumers in three ways:

1. Informational influence (providing knowledge)
2. Normative influence (setting standards and expectations)
3. Value-expressive influence (helping express self-identity)

For example, a student may choose a particular brand of clothing to match the preferences of their peer group. Marketers use celebrities and influencers to create aspirational reference groups.

5. Opinion Leadership

Opinion leadership refers to the process by which certain individuals (opinion leaders) influence the attitudes or behaviour of others. These individuals are knowledgeable, credible, and socially active, making them influential within their groups.

Characteristics of opinion leaders:

• High level of interest and involvement in a product category
• Better access to information
• Strong communication skills
• Socially well-connected

Opinion leaders play a crucial role in spreading information about new products and influencing purchase decisions. They reduce uncertainty and risk for other consumers.

For example, a tech-savvy individual recommending a smartphone can influence friends and peers to purchase the same brand.

6. Dynamics of Opinion Leadership Process

The opinion leadership process explains how information flows from marketers to consumers through intermediaries.

This process is often described by the two-step flow of communication:

1. Information flows from mass media or marketers to opinion leaders.
2. Opinion leaders interpret and pass this information to others (followers).

However, in modern contexts, the process is more complex and interactive, especially with social media platforms where multiple individuals act as both influencers and receivers.

Key elements of the process:

1. Source of information (advertising, media)
2. Opinion leader (interpreter and influencer)
3. Followers (target consumers)

The effectiveness of this process depends on the credibility of the opinion leader and the strength of social relationships.

For example, online influencers on platforms like YouTube or Instagram review products, and their opinions significantly affect consumer buying decisions.

Teaching Insight

For classroom engagement:

Ask students to identify opinion leaders in their own lives (friends, family, social media influencers).

Discuss how culture and subculture influence their daily consumption (food, clothing, festivals).

1. Motivation Behind Opinion Leadership

Definition: The motivation behind opinion leadership refers to the underlying reasons why certain individuals actively influence the attitudes, opinions, and purchase decisions of others.

Explanation: Opinion leaders are not randomly influential; their behaviour is driven by specific psychological and social motivations. These motivations explain why they seek information, share it, and guide others in decision-making.

Major motivations include:

Self-enhancement: Opinion leaders gain recognition, status, and respect within their social group by sharing knowledge. Influencing others enhances their self-image and confidence.

Altruism (Concern for others): Some individuals genuinely wish to help others make better decisions by reducing risk and uncertainty, especially in complex or high-involvement purchases.

Product involvement: Opinion leaders typically have a high level of interest or expertise in a particular product category (e.g., technology, fashion, automobiles). Their involvement drives them to gather and disseminate information.

Social interaction: Sharing opinions facilitates communication and strengthens social relationships. It allows individuals to remain socially active and relevant.

Information power: Possessing knowledge provides a sense of control and influence over others, reinforcing their position within the group.

Example:

A student who is highly knowledgeable about laptops may guide classmates in choosing suitable models. Their motivation may include both helping peers and gaining recognition as a “tech expert.”

2. Family

Definition:

Family is the most important primary reference group that influences an individual’s attitudes, values, and purchasing behaviour.

Explanation:

Family plays a critical role in shaping consumer behaviour because it is the first environment where individuals learn consumption patterns, preferences, and decision-making styles.

Two types of family influence are identified:

Family of orientation: Parents and siblings who influence basic values, beliefs, and long-term behaviour patterns (e.g., attitudes toward savings, brand loyalty).

Family of procreation: Spouse and children who influence day-to-day purchasing decisions and consumption habits.

Family members play different roles in the buying process:

1. Initiator (suggests purchase)
2. Influencer (provides information or advice)
3. Decider (makes final decision)
4. Buyer (makes purchase)
5. User (consumes the product)

Family influence varies depending on the product type, cultural context, and stage in the family life cycle.

Example: In purchasing a car, parents may act as deciders, children as influencers (preferring certain brands), and the entire family as users.

3. Person’s Age

Definition: Age refers to the chronological stage of an individual, which significantly influences needs, preferences, and purchasing behaviour.

Explanation: Consumer needs and wants change as individuals grow older. Age affects tastes, lifestyle choices, and consumption priorities.

1. Children and teenagers: Influenced by trends, peer groups, and media; demand products like gadgets, fashion, and entertainment.
2. Young adults: Focus on career-building, independence, and lifestyle products.
3. Middle-aged consumers: Emphasize family needs, savings, quality, and long-term investments.
4. Older adults: Prefer healthcare products, comfort, and security-related goods.

Marketers often segment markets based on age groups to design targeted products and communication strategies.

Example: A teenager may prefer trendy clothing brands, whereas an older consumer may prioritize comfort and durability in apparel.

4. Life Cycle Stage

Definition: Life cycle stage refers to the different phases in an individual’s or family’s life, each characterized by distinct needs, responsibilities, and consumption patterns.

Explanation: The Family Life Cycle (FLC) concept is widely used to understand consumer behaviour. It recognizes that purchasing decisions vary according to life stages.

Common stages include:

1. Bachelor stage (young, single individuals)
2. Newly married couples
3. Families with young children
4. Families with older children
5. Empty nesters (children have left home)
6. Older individuals (retired)

Each stage has unique financial conditions and consumption priorities. For instance:

1. Young singles spend more on lifestyle and entertainment.
2. Families with children spend more on education, housing, and healthcare.
3. Retired individuals focus on savings and medical needs.

Marketers design products and services tailored to these stages.

Example: A newly married couple may invest in household appliances and furniture, while an older couple may prioritize health insurance and savings plans.

5. Occupational and Economic Circumstances

Occupational and Economic Circumstances

1. Introduction

Consumer behaviour is influenced by a wide range of personal, social, cultural, psychological, and economic factors. Among the important personal factors are the consumer's occupation and economic circumstances.

A person's occupation determines, to some extent, the type of products and services he or she needs, while economic circumstances determine the consumer's ability to purchase those products and services.

For example, a college professor, a construction worker, a business executive, and a farmer may have very different lifestyles, product requirements, spending patterns, and purchasing priorities.

2. Occupational Circumstances

Meaning

Occupation refers to the work or profession in which a person is engaged to earn a livelihood.

Occupational circumstances refer to the nature of a person's job, profession, working conditions, income pattern, status, and occupational requirements that influence his or her consumption behaviour.

Occupation affects:

• What people buy
• How much they buy
• Where they buy
• When they buy
• How frequently they buy
• The brands they prefer
• Their lifestyle and consumption patterns

Definition: Occupational and economic circumstances refer to an individual’s job type, income level, financial stability, and overall economic condition, which influence purchasing behaviour.

Explanation: Occupation determines the kind of products a consumer requires, while economic circumstances determine their ability to purchase those products.

Key elements include:

Occupation: Different professions demand different consumption patterns (e.g., corporate professionals may require formal attire, while laborers may need durable workwear).

Income level: Higher income increases purchasing power and allows for luxury consumption; lower income leads to price sensitivity.

Savings and assets: Influence long-term purchasing decisions.

Credit availability: Enables consumers to make high-value purchases.

Economic conditions: Inflation, recession, or economic growth impact consumer spending behaviour.

Consumers adjust their purchasing decisions based on their financial situation, often prioritizing essential goods during economic constraints.

Example:  A well-paid IT professional may purchase premium gadgets and branded products, whereas a lower-income worker may focus on affordability and essential goods.

Example

A software engineer may require:

• Laptop and other digital devices
• Formal and casual clothing
• Internet services
• Professional courses
• Cafés and food-delivery services

A construction worker may have different requirements such as:

• Work clothes
• Safety shoes
• Protective equipment
• Transportation
• Affordable household products

Thus, occupation creates particular consumption needs and preferences.

3. How Occupation Influences Consumer Behaviour

1. Nature of Products Purchased

Different occupations create different product requirements.

Examples:

Occupation	Possible Consumption Requirements
Doctor	Medical equipment, professional clothing, books
Teacher	Books, stationery, digital devices, formal clothing
Software professional	Laptop, smartphone, internet services
Farmer	Agricultural equipment, seeds, fertilizers
Construction worker	Safety equipment, work clothes, tools
Businessperson	Formal clothing, business travel, communication services

2. Clothing and Fashion

Occupation can strongly influence clothing preferences.

A corporate executive may need:

• Formal shirts
• Trousers
• Blazers
• Formal footwear

A college student may prefer:

• Jeans
• T-shirts
• Sneakers
• Casual wear

Thus, occupation influences dress requirements and fashion choices.

3. Working Hours

Working hours influence consumption patterns.

People working long hours may prefer:

• Online shopping
• Food delivery
• Ready-to-eat food
• Convenience services
• Online banking

People with flexible working hours may have more opportunities for physical shopping.

4. Place of Purchase

Occupation can determine where consumers shop.

For example:

• Professionals may purchase products through e-commerce platforms because of limited time.
• Farmers may purchase agricultural products from specialized local dealers.
• Students may purchase through online marketplaces and local stores.

5. Lifestyle

Occupation is closely associated with lifestyle.

A person's profession may influence:

• Social activities
• Entertainment
• Travel
• Food habits
• Housing
• Transportation
• Recreation

For example, a highly mobile corporate employee may spend more on travel and convenience services.

6. Social Status and Brand Preferences

Certain occupations carry particular social status. Consumers may therefore prefer brands that reflect their professional identity.

For example, a senior executive may prefer premium clothing, automobiles, or accessories because these products may be associated with professional image and status.

7. Occupational Mobility

Changes in occupation can lead to changes in consumption behaviour.

For example, when a student obtains a professional job, his or her:

• Income may increase.
• Clothing requirements may change.
• Transportation needs may change.
• Entertainment expenditure may increase.
• Housing preferences may change.

Therefore, career progression can produce changes in consumer behaviour.

4. Economic Circumstances

Meaning

Economic circumstances refer to the financial position and purchasing capacity of an individual or household, including income, savings, assets, debts, employment stability, and spending patterns.

Economic circumstances determine the consumer's ability to purchase goods and services.

A consumer may desire an expensive product but may not be able to purchase it because of limited financial resources.

5. Major Economic Factors Influencing Consumer Behaviour

1. Income

Income is one of the most important determinants of purchasing behaviour.

Higher income generally provides greater purchasing power, while lower income places greater limitations on consumption.

Example

A consumer with a monthly income of ₹30,000 and another with ₹2,00,000 may have very different preferences regarding:

• Housing
• Cars
• Holidays
• Restaurants
• Clothing
• Electronic goods

However, income alone does not determine behaviour; consumers also differ in their priorities and saving habits.

2. Disposable Income

Disposable income is the income available to an individual or household after paying direct taxes.

It can be used for:

• Consumption
• Savings
• Investment

Example

If a person's income is ₹60,000 and ₹10,000 is paid as tax, the disposable income is ₹50,000.

An increase in disposable income can increase the consumer's ability to purchase discretionary products.

3. Discretionary Income

Discretionary income is the amount of money left after paying for essential necessities.

Essential expenditure may include:

• Food
• Rent
• Utilities
• Education
• Transportation
• Medical expenses

The remaining amount can be spent on:

• Entertainment
• Holidays
• Luxury products
• Eating out
• Recreation

Example

If a family earns ₹80,000 per month but spends ₹60,000 on essential expenses, approximately ₹20,000 is available for discretionary spending and savings.

6. Savings

Savings influence purchasing behaviour because consumers may choose to save rather than spend.

A consumer who has a strong saving orientation may:

• Compare prices carefully.
• Prefer discounts.
• Avoid unnecessary purchases.
• Choose value-for-money brands.

A consumer with substantial savings may have greater financial flexibility.

7. Assets and Wealth

Wealth includes accumulated financial and physical assets such as:

• Land
• Houses
• Gold
• Investments
• Bank deposits
• Shares and securities

Wealth can influence:

• Housing decisions
• Automobile purchases
• Investment decisions
• Luxury consumption
• Travel and leisure expenditure

8. Debt and Credit

Availability of credit can influence consumer purchasing behaviour.

Consumers may purchase products through:

• Bank loans
• Credit cards
• Consumer finance
• EMI schemes
• Buy-now-pay-later arrangements

For example, a person may be unable to pay the entire price of a ₹1,00,000 electronic product immediately but may purchase it through an EMI arrangement.

Important Point

Easy availability of credit can increase purchasing power in the short term, but excessive borrowing can create financial pressure.

9. Employment Stability

Income stability is also important.

A person with a secure and regular income may be more willing to make long-term purchases such as:

• House
• Car
• Insurance
• Furniture

A person with uncertain employment may be more cautious about spending and may prioritize savings and essential goods.

10. General Economic Conditions

Consumer behaviour is also influenced by the broader economy.

Important factors include:

• Inflation
• Unemployment
• Interest rates
• Economic growth
• Recession
• Cost of living

Example: Inflation

When prices rise significantly, consumers may:

• Reduce discretionary spending.
• Compare prices more carefully.
• Switch to cheaper brands.
• Buy smaller quantities.
• Postpone major purchases.

11. Relationship Between Occupation and Economic Circumstances

Occupation and economic circumstances are closely connected.

Occupation can influence income, while income influences purchasing power.

The relationship can be represented as:

Occupation → Income → Purchasing Power → Spending Pattern → Consumption Behaviour

However, this relationship is not absolute. Two people with the same occupation and income may behave differently because of differences in:

• Family responsibilities
• Lifestyle
• Personality
• Values
• Savings habits
• Social influences

12. Impact on the Consumer Decision-Making Process

Occupational and economic circumstances can influence every stage of consumer decision-making.

1. Need Recognition

Occupation may create specific needs.

Example: A teacher may recognize the need for a laptop to prepare teaching materials.

2. Information Search

Economic circumstances determine how much information consumers seek.

Consumers with limited income may spend more time:

• Comparing prices
• Looking for discounts
• Reading reviews

3. Evaluation of Alternatives

Consumers evaluate alternatives according to their purchasing capacity.

4. Purchase Decision

The consumer selects an option that fits both needs and financial capacity.

5. Post-Purchase Behaviour

Economic satisfaction also affects whether consumers feel the purchase was worthwhile.

13. Examples

Example 1: Smartphone

A software professional may prioritize:

• Processor
• RAM
• Display
• Software compatibility
• Productivity features

A student with a limited budget may prioritize:

• Price
• Battery life
• Camera
• Storage
• Offers and discounts

The product category is the same, but occupation and economic circumstances influence the decision criteria.

Example 2: Automobile

A sales executive who travels extensively may prefer a fuel-efficient and reliable vehicle.

A high-income business executive may prefer a premium automobile emphasizing:

• Comfort
• Brand image
• Features
• Status

Example 3: Food

A working professional with limited time may purchase:

• Ready-to-eat food
• Food-delivery services
• Packaged food

A consumer with greater disposable income may spend more frequently on:

• Restaurants
• Premium food products
• Specialty foods

14. Marketing Implications

Understanding occupational and economic circumstances helps marketers to:

1. Segment the market according to occupation and income.
2. Design products for different income groups.
3. Develop suitable pricing strategies.
4. Offer EMI and credit facilities where appropriate.
5. Develop different product versions at different price points.
6. Design appropriate promotional messages.
7. Select suitable distribution channels.
8. Predict changes in consumer demand during economic fluctuations.

Example

A company may offer the same basic product in:

• Economy version
• Standard version
• Premium version

This enables it to serve consumers with different economic circumstances.

15. Important Distinction: Income vs Purchasing Power

These two concepts should not be confused.

Income refers to money earned by an individual or household.

Purchasing power refers to the amount of goods and services that the income can actually buy.

For example, if income increases by 5% but prices increase by 8%, the consumer's real purchasing power may decline.

Therefore, marketers must consider not only income but also:

• Prices
• Inflation
• Household expenses
• Interest rates
• Debt
• Cost of living

16. Summary

Occupational circumstances influence consumer behaviour because a person's profession determines many of his or her practical needs, lifestyle choices, social interactions, working conditions, and purchasing requirements.

Economic circumstances influence consumer behaviour because they determine the consumer's ability and willingness to purchase goods and services.

The major economic factors are:

Income + Disposable Income + Discretionary Income + Savings + Wealth + Credit/Debt + Employment Stability + Economic Conditions

Together, occupational and economic circumstances help explain what consumers buy, how much they buy, how frequently they buy, what brands they prefer, and how they respond to price changes.

Examination-Oriented Questions

Short Answer Questions

1. What are occupational circumstances?
2. Define economic circumstances.
3. How does occupation influence consumer behaviour?
4. What is disposable income?
5. What is discretionary income?
6. How does income affect consumer behaviour?
7. How do savings influence buying behaviour?
8. What is the effect of inflation on consumer behaviour?
9. How does employment stability affect purchasing decisions?
10. What is the relationship between occupation and income?

Long Answer Questions

1. Explain the influence of occupational circumstances on consumer behaviour with suitable examples.
2. Discuss the various economic circumstances that influence consumer behaviour.
3. Explain how income, savings, wealth, credit and employment stability affect consumer purchasing decisions.
4. Discuss the relationship between occupational and economic circumstances and consumer behaviour.
5. Explain the marketing implications of occupational and economic circumstances.

Application-Based Question

A young software engineer and a self-employed small trader have the same monthly income. However, their purchasing patterns are very different. Explain how occupation, lifestyle, financial priorities and economic circumstances could result in different consumer behaviour.

Key idea for students:

Occupation influences what a consumer needs; economic circumstances influence what the consumer can afford; together, they influence what the consumer finally buys.