What Are Important Determinants of Consumer Behavior?

by Dan Ketchum ; Updated November 14, 2018

Consumer businesses aren't just limited to those that sell physical products at big-box retailers or quaint Etsy stores, or even to the hippest of vegan cafes peddling fair-trade, all-organic meals. If your business deals in business-to-business products or industrial, financial or professional services, you're a consumer-oriented outfit, too. And if you're dealing with consumers, you're also dealing with the determinants of consumer behavior – or, to put it more plainly, the day-to-day factors that influence consumer purchasing decisions.

Consumer Behavior Examples Are Infinite

Because every person on this planet is a complex, ever-evolving collection of the influences and experiences they've gathered over their time on earth, consumer behavior examples are just about infinite. But lucky for you and every other small business owner out there, we can at least break down the individual determinants of consumer behavior into five major categories.

Psychological or Internal Factors

Just like a good actor, a consumer always has a motivation. Motivations are the psychological urges that cause a consumer to make a purchase. These urges range from basic driving forces like the hunger that leads a consumer to buy a five-star meal or a quick protein bar, to a desire to boost self-esteem, which creates the feeling that you just "have" to have that new pair of skinny jeans.

Motivation isn't quite that simple, though. Each purchase is affected by a psychological hierarchy determined by the purchaser. Naturally, most reasonable consumers are going to put food and rent higher on the purchasing pecking order than video games and a new pair of Yeezys.

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Demographic Behavior Factors

Also known as social behavior factors, this particular group of determinants is a little more clear-cut than the rest. Demographic data might include age, gender, household size, income level, marital status, occupation or even religion. Based on collected statistical data, certain demographics exhibit quantifiably different buying habits – women typically have different purchasing habits than men (products, in turn, are often marketed to target specific genders) and a larger household is more likely to purchase greater amounts of essentials like food and clothes when compared to a smaller household.

Cultural Behavior Factors

Cultural or sociocultural behavior factors are similar to demographic factors, but this determinant focuses more on highly specific individual differences. A person's education level, amount of leisure time or status on the family life-cycle stage – ranging from fiancés to empty-nesters – are all examples of sociocultural behavior factors. A creative freelance couple without kids who've just started living together might be more likely to buy a gym membership than a couple that works full time and has two kids, while a boomer retiree is probably more prone to purchase a timeshare than a millennial grad student would be.

Economic Behavior Factors

When it comes to factors that influence consumer purchasing decisions, economic effects break down into two basic categories.

In the big picture, the societal or socioeconomic landscape each consumer inhabits – ranging from the buying power of a country's currency to how purchases are taxed on a state level, for example – influence purchasing behavior, as do factors such as supply and demand and the overall material quality of life in any given region. On a much more individual level, your income level (plus savings, family income and other assets) directly affects your purchasing behavior – if you don't have the money for a Patek Philippe watch, you won't be buying a Patek Philippe watch.

Personal Behavior Factors

Things here get a little more difficult for businesses to predict. Personal behavior factors are the purely subjective views unique to each consumer, from time-worn worldviews ("buy American") to arbitrary opinions ("I don't want to buy this green stationary mixer because I was wearing a green shirt that one time I got sick in Cabo."). Think of personal behavior factors as the baggage each person carries when approaching a purchase.

Experience is a personal behavior factor influenced by the individual associations of the consumer, whether positive or negative, which may be decades old. A business is often better off responding to past experience behavior on the fly rather than trying to anticipate it.

About the Author

Dan is a co-owner, founder and partner at two small businesses, both active in multimedia production in Los Angeles and Cincinnati. He's contributed what he's learned about small business over the past decade to publications such as Chron Careers, Fortune, AZ Central Small Business Tech, GlobalPost Careers, GoBankingRates.com, Motley Fool, MSN Money and others.

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