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Marketing Environment and Consumer Buying Behaviour

The Marketing Environment encompasses both internal and external factors that influence a business's marketing operations, including controllable elements like employees and suppliers, and uncontrollable factors such as political and economic conditions. Market segmentation is a key strategy that divides a target market into smaller groups based on shared characteristics, allowing for more effective marketing efforts. The document outlines the importance of understanding the marketing environment and market segmentation, detailing various types and benefits of segmentation to enhance marketing strategies.

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0% found this document useful (0 votes)
75 views24 pages

Marketing Environment and Consumer Buying Behaviour

The Marketing Environment encompasses both internal and external factors that influence a business's marketing operations, including controllable elements like employees and suppliers, and uncontrollable factors such as political and economic conditions. Market segmentation is a key strategy that divides a target market into smaller groups based on shared characteristics, allowing for more effective marketing efforts. The document outlines the importance of understanding the marketing environment and market segmentation, detailing various types and benefits of segmentation to enhance marketing strategies.

Uploaded by

uucmshuhk
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
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Marketing Environment

Marketing Environment

Definition: The Marketing Environment includes the Internal factors


(employees, customers, shareholders, retailers & distributors, etc.) and the
External factors( political, legal, social, technological, economic) that
surround the business and influence its marketing operations.

Some of these factors are controllable while some are uncontrollable and
require business operations to change accordingly. Firms must be well
aware of its marketing environment in which it is operating to overcome the
negative impact the environment factors are imposing on firm’s marketing
activities.

The marketing environment can be broadly classified into three parts:

1. Internal Environment – The Internal Marketing Environment


includes all the factors that are within the organization and affects the
overall business operations. These factors include labor, inventory,
company policy, logistics, budget, capital assets, etc. which are a
part of the organization and affects the marketing decision and its
relationship with the customers. These factors can be controlled by
the firm.
2. Microenvironment- The Micro Marketing Environment includes all
those factors that are closely associated with the operations of the
business and influences its functioning. The microenvironment
factors include customers, employees, suppliers, retailers &
distributors, shareholders, Competitors, Government and General
Public. These factors are controllable to some extent.

These factors are further


elaborated:

 Customers– Every business revolves around fulfilling


the customer’s needs and wants. Thus, each marketing strategy is
customer oriented that focuses on understanding the need of the
customers and offering the best product that fulfills their needs.
 Employees– Employees are the main component of a business who
contributes significantly to its success. The quality of employees
depends on the training and motivation sessions given to them. Thus,
Training & Development is crucial to impart marketing skills in an
individual.
 Suppliers– Suppliers are the persons from whom the material is
purchased to make a finished good and hence are very important for
the organization. It is crucial to identify the suppliers existing in the
market and choose the best that fulfills the firm’s requirement.
 Retailers & Distributors– The channel partners play an imperative
role in determining the success of marketing operations. Being in

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direct touch with customers they can give suggestions about
customer’s desires regarding a product and its services.
 Competitors– Keeping a close watch on competitors enables a
company to design its marketing strategy according to the trend
prevailing in the market.
 Shareholders– Shareholders are the owners of the company, and
every firm has an objective of maximizing its shareholder’s wealth.
Thus, marketing activities should be undertaken keeping in mind the
returns to shareholders.
 Government– The Government departments make several policies
viz. Pricing policy, credit policy, education policy, housing policy, etc.
that do have an influence on the marketing strategies. A company
has to keep track on these policies and make the marketing
programs accordingly.
 General public– The business has some social responsibility
towards the society in which it is operating. Thus, all the marketing
activities should be designed that result in increased welfare of the
society as a whole.3. Macro Environment-The Macro Marketing
Environment includes all those factors that exist outside the
organization and can not be controlled. These factors majorly include
Social, Economic, Technological Forces, Political and Legal
Influences. These are also called as PESTLE framework.

The detailed
description of Macro factors is given below:

 Political & Legal Factors– With the change in political parties,


several changes are seen in the market in terms of trade, taxes, and
duties, codes and practices, market regulations, etc. So the firm has
to comply with all these changes and the violation of which could
penalize its business operations.

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 Economic Factors– Every business operates in the economy and is
affected by the different phases it is undergoing. In the case of
recession, the marketing practices should be different as what are
followed during the inflation period.
 Social Factors– since business operates in a society and has some
responsibility towards it must follow the marketing practices that do
not harm the sentiments of people. Also, the companies are required
to invest in the welfare of general people by constructing public
conveniences, parks, sponsoring education, etc.
 Technological Factors– As technology is advancing day by day, the
firms have to keep themselves updated so that customers needs can
be met with more precision.
Therefore, marketing environment plays a crucial role in the operations of a
business and must be reviewed on a regular basis to avoid any difficulty.

What Is Market Segmentation?


Market segmentation is the process of dividing a target market into smaller, more
defined categories. It segments customers and audiences into groups that share
similar characteristics such as demographics, interests, needs, or location.

Eight Benefits of Market Segmentation


The importance of market segmentation is that it makes it easier to focus marketing
efforts and resources on reaching the most valuable audiences and achieving
business goals.

Market segmentation allows you to get to know your customers, identify what is
needed in your market segment, and determine how you can best meet those needs
with your product or service. This helps you design and execute better marketing
strategies from top to bottom.

Market segmentation helps you get to know your customers,


identify what's needed in your market segment, and determine how
you can best meet those needs with your product or service. Click
To Tweet

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1. Create stronger marketing messages
When you know whom you’re talking to, you can develop stronger marketing
messages. You can avoid generic, vague language that speaks to a broad audience.
Instead, you can use direct messaging that speaks to the needs, wants, and unique
characteristics of your target audience.

2. Identify the most effective marketing tactics


With dozens of marketing tactics available, it can be difficult to know what will
attract your ideal audience. Using different types of market segmentation guides you
toward the marketing strategies that will work best. When you know the audience
you are targeting, you can determine the best solutions and methods for reaching
them.

3. Design hyper-targeted ads


On digital ad services, you can target audiences by their age, location, purchasing
habits, interests, and more. When you use market segmentation to define your
audience, you know these detailed characteristics and can use them to create more
effective, targeted digital ad campaigns.

4. Attract (and convert) quality leads


When your marketing messages are clear, direct, and targeted they attract the right
people. You draw in ideal prospects and are more likely to convert potential
customers into buyers.

When your marketing messages are clear, direct, and targeted they
attract the right people. Click To Tweet
5. Differentiate your brand from competitors
Being more specific about your value propositions and messaging also allows you to
stand out from competitors. Instead of blending in with other brands, you can
differentiate your brand by focusing on specific customer needs and characteristics.

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6. Build deeper customer affinity
When you know what your customers want and need, you can deliver and
communicate offerings that uniquely serve and resonate with them Click & Tweet! .
This distinct value and messaging leads to stronger bonds between brands and
customers and creates lasting brand affinity.

7. Identify niche market opportunities


Niche marketing is the process of identifying segments of industries and verticals
that have a large audience that can be served in new ways. When you segment your
target market, you can find underserved niche markets that you can develop new
products and services for.

8. Stay focused
Targeting in marketing keeps your messaging and marketing objectives on track. It
helps you identify new marketing opportunities and avoid distractions that will lead
you away from your target market.

The Four Types of Market


Segmentation
The four bases of market segmentation are:

 Demographic segmentation
 Psychographic segmentation
 Behavioral segmentation
 Geographic segmentation

Within each of these types of market segmentation, multiple sub-categories further


classify audiences and customers.

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Demographic Segmentation
Demographic segmentation is one of the most popular and commonly used types of
market segmentation. It refers to statistical data about a group of people.

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Demographic Market Segmentation Examples

 Age
 Gender
 Income
 Location
 Family Situation
 Annual Income
 Education
 Ethnicity

Where the above examples are helpful for segmenting B2C audiences, a business
might use the following to classify a B2B audience:

 Company size
 Industry
 Job function

Because demographic information is statistical and factual, it is usually relatively


easy to uncover using various sites for market research.

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A simple example of B2C demographic segmentation could be a vehicle
manufacturer that sells a luxury car brand (ex. Maserati). This company would likely
target an audience that has a higher income.

Another B2B example might be a brand that sells an enterprise marketing platform.
This brand would likely target marketing managers at larger companies (ex. 500+
employees) who have the ability to make purchase decisions for their teams.

Psychographic Segmentation
Psychographic segmentation categorizes audiences and customers by factors that
relate to their personalities and characteristics.

Psychographic Market Segmentation Examples

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 Personality traits
 Values
 Attitudes
 Interests
 Lifestyles
 Psychological influences
 Subconscious and conscious beliefs
 Motivations
 Priorities

Psychographic segmentation factors are slightly more difficult to identify than


demographics because they are subjective. They are not data-focused and require
research to uncover and understand.

For example, the luxury car brand may choose to focus on customers who value
quality and status. While the B2B enterprise marketing platform may target
marketing managers who are motivated to increase productivity and show value to
their executive team.

Related: 4 types of market research to fuel your marketing strategies

Behavioral Segmentation
While demographic and psychographic segmentation focus on who a customer
is, behavioral segmentation focuses on how the customer acts.

Behavioral Market Segmentation Examples

 Purchasing habits
 Spending habits
 User status
 Brand interactions

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Behavioral segmentation requires you to know about your customer’s actions. These
activities may relate to how a customer interacts with your brand or to other
activities that happen away from your brand.

A B2C example in this segment may be the luxury car brand choosing to target
customers who have purchased a high-end vehicle in the past three years. The B2B
marketing platform may focus on leads who have signed up for one of their free
webinars.

Geographic Segmentation
Geographic segmentation is the simplest type of market segmentation. It categorizes
customers based on geographic borders.

Geographic Market Segmentation Examples

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 ZIP code
 City
 Country
 Radius around a certain location
 Climate
 Urban or rural

Geographic segmentation can refer to a defined geographic boundary (such as a city


or ZIP code) or type of area (such as the size of city or type of climate).

An example of geographic segmentation may be the luxury car company choosing to


target customers who live in warm climates where vehicles don’t need to be equipped
for snowy weather. The marketing platform might focus their marketing efforts
around urban, city centers where their target customer is likely to work.

How to Create a Market Segmentation


Strategy
Now, you know what market segmentation is, why it’s important, and the four types
of market segmentation. It’s time to put this information into practice.

Use the following market segmentation process to learn about your audience and
find new marketing and product opportunities.

1. Analyze your existing customers


If you have existing customers, start your market segmentation process by
performing an audience analysis. An audience analysis allows you to learn about your
customers and begin to identify trends that exist within your current customer
base. Use these market research questions to guide your research.

Interview your customers.

Go right to the source and conduct interviews with existing customers, past
customers, ideal customers, and prospects and leads. Ask questions that help you fill
in the details of all four types of market segmentation.

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Interview your sales team.

If you have a sales team that spends a lot of time working with customers, use them
as a resource. Interview them to find commonalities or trends they often see while
working with your customers.

Refer to your business data.

Your business likely has loads of data that can help you get to know your customers.
Use your customer relationship management tools and point-of-sale systems to find
trends related to behavioral segmentation. Pull data that shows how much customers
spend, how often they visit your store, and the type of products and services they
buy.

Use your website analytics.

Your website also has data that can help you learn about your audience. Use Google
Analytics to find details related to all four types of market segmentation. For
example, you can learn about customer behavior by seeing what pages users visit,
how long they stay on the site, and what referral sites led them to your site.

Research audience geography.

Get details for graphic segmentation and find out where your audience lives using
Alexa’s Site Overview tool. Enter your site URL, and the report shows you where your
website visitors are located across the world.

Research audience interests.

Knowing your audience’s interests can help you identify psychographic segments
within your customer base. Use Alexa’s Audience Interest tool to find topics and

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categories that your audience cares about. Enter your site URL to produce a report of
categories that your audience is interested in.

Learn more about your audience by seeing what other websites they use. Enter the
URL of your website in Alexa’s Audience Overlap tool to create a cluster map with
dozens of other sites that your audience regularly visits.

See what your customers search for.

Knowing what your customers search for is a great way to get inside their minds and
see what they want and need Click & Tweet! . To see what terms your audience
searches for, use Alexa’s Audience Overlap tool and Competitor Keyword Matrix tool.

Start by using the Audience Overlap tool to create a list of sites that your audience
visits. Then, toggle to the list view, select up to 10 sites, and run the sites through
Alexa’s Competitor Keyword Matrix.

The tool produces a report of the top keywords driving traffic to the listed sites. Use
this data to identify the topics and themes that matter most to your target market.

2. Create a buyer persona for your ideal customer


Once you complete an audience analysis, you’ll have a good idea about who your
current customers are. In the next step, take your data and use it to create a buyer
persona that describes the exact type of customer you’d like to attract.

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A buyer persona is a semi-fictional description of your ideal customer. It allows you
to clearly visualize the person that your brand is trying to attract. Knowing whom you
want to work with will make it easier to find the right market segment opportunities.

If you need help with creating a persona, use this free downloadable buyer persona
template to walk you through the process.

Related Reading: Here Are 10 Buyer Persona Examples to Help You Create Your
Own

3. Identify market segment opportunities.


Once you have a buyer persona that describes your ideal customer, start looking for
market segment opportunities.

A market segment opportunity is a trend that can drive new marketing tactics or
offerings. To find them, first ask questions about your brand.

 What problems does your brand solve?


 What problems can you solve better than your competitors?
 What do you know a lot about or excel at?
 Who do you and your team like to serve?

Then, refer back to your audience analysis and buyer persona and ask questions that
uncover opportunities.

 What large segments stick out?


 What customer characteristics or qualities are most common?
 What segments are currently not being served?
 What segments is your brand uniquely qualified to serve?

Identify a few potential market segment opportunities, and then research to confirm
that they are viable.

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4. Research your potential segment.
Before you launch a marketing campaign for a new segment of your market, verify
that it is a good option. Research to see what competition exists and if audiences are
interested in your new market.

Gauge search interest.

Perform keyword research to make sure audiences are searching for terms related to
your new market segment. Enter search phrases into Alexa’s Keyword Difficulty
tool to measure audience interest and competition. Look for phrases that are popular
with low competition to find a sweet spot.

Research the competition.

If there is interest in your market, research to see what competition is already in the
space. Use Alexa’s Keyword Share of Voice tool to find brands already in the market.
Enter a search phrase to create a report with brands that own the top share-of-voice
for the phrase.

Share of voice represents the amount of traffic that a website receives for a specific
keyword. It helps you identify brands already in the market, so you can see if you can
compete with them and how you can differentiate your brand from their existing
offerings.

5. Test and iterate


Once you find a new market you want to explore, don’t go all in just yet. Create a few
campaigns to test your idea.

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The Six Stages of the Consumer Buying Process and
How to Market to

Far too often, retailers think that consumer buying is randomized. That
certain products appeal to certain customers and that a purchase either
happens or it doesn’t. They approach product and service marketing in
the same way, based on trial and error. What if there were a distinctive
set of steps that most consumers went through before deciding
whether to make a purchase or not? What if there was a scientific
method for determining what goes into the buying process that could
make marketing to a target audience more than a shot in the dark?

The good news? It does exist. The actual purchase is just one step. In
fact, there are six stages to the consumer buying process, and as a
marketer, you can market to them effectively.

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1.Problem Recognition
Put simply, before a purchase can ever take place, the customer must
have a reason to believe that what they want, where they want to be or
how they perceive themselves or a situation is different from where
they actually are. The desire is different from the reality – this presents
a problem for the customer.

However, for the marketer, this creates an opportunity. By taking the


time to “create a problem” for the customer, whether they recognize
that it exists already or not, you’re starting the buying process. To do
this, start with content marketing. Share facts and testimonials of what
your product or service can provide. Ask questions to pull the potential
customer into the buying process. Doing this helps a potential customer
realize that they have a need that should be solved.

2. Information Search
Once a problem is recognized, the customer search process begins.
They know there is an issue and they’re looking for a solution. If it’s a
new makeup foundation, they look for foundation; if it’s a new
refrigerator with all the newest technology thrown in, they start looking
at refrigerators – it’s fairly straight forward.

As a marketer, the best way to market to this need is to establish your


brand or the brand of your clients as an industry leader or expert in a
specific field. Methods to consider include becoming a Google Trusted
Store or by advertising partnerships and sponsors prominently on all
web materials and collaterals.

Becoming a Google Trusted Store, like CJ Pony Parts – a leading


dealer of Ford Mustang parts – allows you to increase search rankings
and to provide a sense of customer security by displaying your status
on your website.

Increasing your credibility markets to the information search process by


keeps you in front of the customer and ahead of the competition.

3. Evaluation of Alternatives
Just because you stand out among the competition doesn’t mean a
customer will absolutely purchase your product or service. In fact, now
more than ever, customers want to be sure they’ve done thorough
research prior to making a purchase. Because of this, even though they

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may be sure of what they want, they’ll still want to compare other
options to ensure their decision is the right one.

Marketing to this couldn’t be easier. Keep them on your site for the
evaluation of alternatives stage. Leading insurance provider
Geico allows customers to compare rates with other insurance
providers all under their own website – even if the competition can offer
a cheaper price. This not only simplifies the process, it establishes a
trusting customer relationship, especially during the evaluation of
alternatives stage.

4. Purchase Decision
Somewhat surprisingly, the purchase decision falls near the middle of
the six stages of the consumer buying process. At this point, the
customer has explored multiple options, they understand pricing and
payment options and they are deciding whether to move forward with
the purchase or not. That’s right, at this point they could still decide to
walk away.

This means it’s time to step up the game in the marketing process by
providing a sense of security while reminding customers of why they
wanted to make the purchase in the first time. At this stage, giving as
much information relating to the need that was created in step one
along with why your brand, is the best provider to fulfill this need is
essential.

If a customer walks away from the purchase, this is the time to bring
them back. Retargeting or simple email reminders that speak to the
need for the product in question can enforce the purchase decision,
even if the opportunity seems lost. Step four is by far the most
important one in the consumer buying process. This is where profits
are either made or lost.

5. Purchase
A need has been created, research has been completed and the
customer has decided to make a purchase. All the stages that lead to a
conversion have been finished. However, this doesn’t mean it’s a sure
thing. A consumer could still be lost. Marketing is just as important
during this stage as during the previous.

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Marketing to this stage is straightforward: keep it simple. Test your
brand’s purchase process online. Is it complicated? Are there too many
steps? Is the load time too slow? Can a purchase be completed just as
simply on a mobile device as on a desktop computer? Ask these critical
questions and make adjustments. If the purchase process is too
difficult, customers, and therefore revenue, can be easily lost.

6. Post-Purchase Evaluation
Just because a purchase has been made, the process has not ended.
In fact, revenues and customer loyalty can be easily lost. After a
purchase is made, it’s inevitable that the customer must decide
whether they are satisfied with the decision that was made or not. They
evaluate.

If a customer feels as though an incorrect decision was made, a return


could take place. This can be mitigated by identifying the source of
dissonance, and offering an exchange that is simple and
straightforward. However, even if the customer is satisfied with his or
her decision to make the purchase, whether a future purchase is made
from your brand is still in question. Because of this, sending follow-up
surveys and emails that thank the customer for making a purchase are
critical.

Take the time to understand the six stages of the consumer buying
process. Doing this ensures that your marketing strategy addresses
each stage and leads to higher conversions and long-term customer
loyalty

Major Factors Influencing Consumer Behavior

1. Psychological Factors
2. Social Factors
3. Cultural Factors
4. Personal Factors
5. Economic Factors
Consumer behavior is influenced by many different factors. A marketer should try
to understand the factors that influence consumer behavior. Here are 5 major
factors that influence consumer behavior:

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1. Psychological Factors
Human psychology is a major determinant of consumer behavior. These factors are
difficult to measure but are powerful enough to influence a buying decision.
Some of the important psychological factors are:

i. Motivation
When a person is motivated enough, it influences the buying behaviour of the
person. A person has many needs such as the social needs, basic needs, security
needs, esteem needs and self-actualization needs. Out of all these needs, the basic
needs and security needs take a position above all other needs. Hence basic needs
and security needs have the power to motivate a consumer to buy products and
services.
ii. Perception
Consumer perception is a major factor that influences consumer behavior.
Customer perception is a process where a customer collects information about a
product and interprets the information to make a meaningful image about a particular
product.
When a customer sees advertisements, promotions, customer reviews, social media
feedback, etc. relating to a product, they develop an impression about the product.
Hence consumer perception becomes a great influence on the buying decision of
consumers.
iii. Learning
When a person buys a product, he/she gets to learn something more about the product.
Learning comes over a period of time through experience. A consumer’s learning depends on
skills and knowledge. While a skill can be gained through practice, knowledge can be
acquired only through experience.

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Learning can be either conditional or cognitive. In conditional learning the consumer is
exposed to a situation repeatedly, thereby making a consumer to develop a response towards
it.
Whereas in cognitive learning, the consumer will apply his knowledge and skills to find
satisfaction and a solution from the product that he buys.
iv. Attitudes and Beliefs
Consumers have certain attitude and beliefs which influence the buying decisions of a
consumer. Based on this attitude, the consumer behaves in a particular way towards a
product. This attitude plays a significant role in defining the brand image of a product. Hence,
the marketers try hard to understand the attitude of a consumer to design their marketing
campaigns.
2. Social Factors
Humans are social beings and they live around many people who influence their
buying behavior. Human try to imitate other humans and also wish to be socially
accepted in the society. Hence their buying behavior is influenced by other people
around them. These factors are considered as social factors. Some of the social
factors are:
i. Family
Family plays a significant role in shaping the buying behavior of a person. A person
develops preferences from his childhood by watching family buy products and
continues to buy the same products even when they grow up.
ii. Reference Groups
Reference group is a group of people with whom a person associates himself.
Generally, all the people in the reference group have common buying behavior and
influence each other.
iii. Roles and status
A person is influenced by the role that he holds in the society. If a person is in a high
position, his buying behavior will be influenced largely by his status. A person who is
a Chief Executive Officer in a company will buy according to his status while a staff
or an employee of the same company will have different buying pattern.
3. Cultural factors
A group of people are associated with a set of values and ideologies that belong to a
particular community. When a person comes from a particular community, his/her
behavior is highly influenced by the culture relating to that particular community.
Some of the cultural factors are:
i. Culture
Cultural Factors have strong influence on consumer buyer behavior. Cultural
Factors include the basic values, needs, wants, preferences, perceptions, and
behaviors that are observed and learned by a consumer from their near family
members and other important people around them.
ii. Subculture
Within a cultural group, there exists many subcultures. These subcultural groups
share the same set of beliefs and values. Subcultures can consist of people from
different religion, caste, geographies and nationalities. These subcultures by itself
form a customer segment.

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iii. Social Class
Each and every society across the globe has form of social class. The social class is
not just determined by the income, but also other factors such as the occupation,
family background, education and residence location. Social class is important to
predict the consumer behavior.
4. Personal Factors
Factors that are personal to the consumers influence their buying behavior. These
personal factors differ from person to person, thereby producing different perceptions
and consumer behavior.
Some of the personal factors are:
i. Age
Age is a major factor that influences buying behavior. The buying choices of youth
differ from that of middle-aged people. Elderly people have a totally different buying
behavior. Teenagers will be more interested in buying colorful clothes and beauty
products. Middle-aged are focused on house, property and vehicle for the family.
ii. Income
Income has the ability to influence the buying behavior of a person. Higher income
gives higher purchasing power to consumers. When a consumer has higher
disposable income, it gives more opportunity for the consumer to spend on luxurious
products. Whereas low-income or middle-income group consumers spend most of
their income on basic needs such as groceries and clothes.
iii. Occupation
Occupation of a consumer influences the buying behavior. A person tends to buy
things that are appropriate to this/her profession. For example, a doctor would buy
clothes according to this profession while a professor will have different buying
pattern.
iv. Lifestyle
Lifestyle is an attitude, and a way in which an individual stay in the society. The
buying behavior is highly influenced by the lifestyle of a consumer. For example
when a consumer leads a healthy lifestyle, then the products he buys will relate to
healthy alternatives to junk food.
5. Economic Factors
The consumer buying habits and decisions greatly depend on the economic situation of a
country or a market. When a nation is prosperous, the economy is strong, which leads to the
greater money supply in the market and higher purchasing power for consumers. When
consumers experience a positive economic environment, they are more confident to spend on
buying products.
Whereas, a weak economy reflects a struggling market that is impacted by
unemployment and lower purchasing power.
Economic factors bear a significant influence on the buying decision of a consumer.
Some of the important economic factors are:
i. Personal Income
When a person has a higher disposable income, the purchasing power increases
simultaneously. Disposable income refers to the money that is left after spending
towards the basic needs of a person.

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When there is an increase in disposable income, it leads to higher expenditure on
various items. But when the disposable income reduces, parallelly the spending on
multiple items also reduced.
ii. Family Income
Family income is the total income from all the members of a family. When more
people are earning in the family, there is more income available for shopping basic
needs and luxuries. Higher family income influences the people in the family to buy
more. When there is a surplus income available for the family, the tendency is to buy
more luxury items which otherwise a person might not have been able to buy.
iii. Consumer Credit
When a consumer is offered easy credit to purchase goods, it promotes higher
spending. Sellers are making it easy for the consumers to avail credit in the form of
credit cards, easy installments, bank loans, hire purchase, and many such other
credit options. When there is higher credit available to consumers, the purchase of
comfort and luxury items increases.
iv. Liquid Assets
Consumers who have liquid assets tend to spend more on comfort and luxuries.
Liquid assets are those assets, which can be converted into cash very easily. Cash
in hand, bank savings and securities are some examples of liquid assets. When a
consumer has higher liquid assets, it gives him more confidence to buy luxury goods.
v. Savings
A consumer is highly influenced by the amount of savings he/she wishes to set aside
from his income. If a consumer decided to save more, then his expenditure on
buying reduces. Whereas if a consumer is interested in saving more, then most of
his income will go towards buying products.

Ganesh hosapeti, Teaching assistant, KUPG Centre Haveri

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