What Factors Have the Greatest Impact on Consumer Buying Decisions?
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I. Introduction
Consumers, or the end users of goods and services, are motivated by many factors when making a purchase decision. Factors such as product price, consumer income, credit availability, advertising/promotional techniques, reference group identification, emotional attachment and product technology all play a critical role in a consumers decision to make a purchase.
II. Product Price and Consumer Income
Price and income level are strong determining factors in consumer purchasing behavior. The cost of goods and the consumers available disposable income will determine what products are purchased and in what quantities. It is common knowledge to marketers that consumer income is important and they will set prices and market their products accordingly. For example, high income earners will purchase high-priced luxury items (cars, jewelry, etc.) that are beyond the economic reach of lower income earners. Premium automotive manufacturers such as BMW effectively market their products to high income earners by promoting the air of exclusivity, the perceived excellence of German engineering and the thrill of high performance driving. These perceived factors make the “Ultimate Driving Machine” popular with high income earners. Conversely, lower income earners will purchase lower-priced goods that provide functional performance without the luxury element. For example, Kia Motors is successfully marketing new cars to lower income earners. Used car sellers once dominated the lower-income automotive market. However, Kia Motors now provides new vehicles at pre-owned prices and has substantially changed the landscape of the automotive market.
III. Availability of Credit
Related to price and income is the availability of credit resources which allow consumers to purchase products without the need for cash on hand. This has resulted in lower-income consumers purchasing expensive technology products despite their income level. The availability of credit will typically influence the purchase decision in an upward direction (more expensive). Companies such as Rent-A-Center have successfully marketed their services to lower income consumers. The ability to finance high-priced technology/entertainment items without a credit check is a very successful marketing tactic, despite the fact that the consumer often ends up paying much more in the long run. Rent-A-Center is a prime example of a company that influences consumers into making poor long-term decisions for the sake of short-term gratification. Credit also influences impulse buying at all income levels. With available credit, products will be purchased on impulse with little regard for income status of financial constraint.
IV. Reference Groups
Reference groups are another powerful determiner of consumer purchasing decisions. These are groups that a consumer uses as a point of reference for their judgment, values and behavior. Normative reference groups such as family and friends will provide ideas and suggestions to a consumer regarding purchase decisions for a specific product or brand. Johnson & Johnson, the manufacturer of personal