Psychological Influences on Consumer Decision Making

  • Post last modified:14 August 2023
  • Reading time:25 mins read
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Psychological Influences on Consumer Decision Making

The knowledge of consumer needs is central to the concept and practice of marketing. Most psychologists and consumer researchers agree that human beings have same needs but at different levels of arousal. Consumers can be grouped into meaningful homogeneous segments based on different levels of needs arousal.

Further, consumer wants are translated into motivation. All consumers are different and unique; therefore, it is important that the marketers understand their diverse needs and provide relevant product and service offerings. The marketers must be careful that the products are offered keeping in mind different consumer segments and their needs.

A thorough understanding of human needs and motives can help the marketers understand and predict consumption behaviour.

As you can recall that the consumer decision-making, need recognition is the first stage. It is the stage that initiates the decision-making process because the consumer realises that there exists a gap between his or her current situation and some desired situation. For example, a person recognises a need when he realizes that his TV, even though perfectly functional, is not a smart TV. Once a need has been recognised, the consumer enters a state of turmoil where he has to attempt to reduce or eliminate the need.

It is a constant quest for marketers to design products and services that deliver the needed benefits and allow the consumer to ease their state of tension. When a product does deliver on the needs, it is reinforced, making it more likely that the consumer will go the same route the next time he realises this need.

Needs may be physiological, biological, social, etc., and some needs are most pressing than others. When a need is more pressing, it becomes a motivation that drives the person to seek satisfaction. Motivation is thus the reason that drives consumers to develop a purchasing behaviour.

When motivated, a consumer begins research and analysis activities relevant to his purchase activity before taking the final decision. Motivation generally operates at a subconscious level and is therefore difficult to measure. Marketers strive to create or reinforce various needs in the mind of consumers so that a pressing motivation is developed in the minds of the consumers to purchase the marketed products.

Maslow’s Hierarchy of Needs

This theory suggested that people are first motivated to satisfy their basic needs and thereafter, move to the fulfilment of more advanced needs.

The order in which the needs are listed is not any coincidence. According to Maslow, physiological needs must be met before safety needs. Also, physiological and safety needs must be met before love and belongingness. Similarly, physiological, safety and love and belongingness needs must be met before self-esteem. Lastly, the needs pertaining to physiological, safety and love, belongingness, and self-esteem must be met before self-actualisation needs.

Physiological Needs

These needs represent biological requirements for the survival of humans. For example, air, food, drink, shelter, clothing, warmth, sleep, etc. These needs are at the bottom of the pyramid, and are the most pressing ones. If these needs are not fulfilled, humans cannot function optimally. According to Maslow, physiological needs the most important ones as all the other needs become secondary until these needs are met.

Safety Needs

Once physiological needs of an individual are met, his safety needs arise. Emotional security, financial security, freedom from fear, social stability, health and well-being are examples of safety needs. Safety needs arise as every individual wants to experience order, predictability and control in his life.

Love and Belongingness Needs

After the physiological and safety needs are satisfied, there come love and belongingness needs. Belongingness refers to the emotional need of humans to be an accepted member of a group. Examples of belongingness needs include friendship, intimacy, trust, acceptance, affection and love.

Esteem Needs

These needs include dignity, achievement, mastery, independence, status, prestige, etc. As per Maslow, the need for respect or reputation is crucial for children and adolescents.

Self-actualisation Needs

These are the highest level needs in the pyramid. These needs include the realisation of a person’s potential, self-fulfilment, seeking personal growth and peak experiences

The Maslow’s hierarchy of needs is important for marketers as they need to find creative ways to communicate with consumers about products that will satisfy their needs. To apply this theory, marketers need to refer to each level of Maslow’s hierarchy. They need to convince consumers that their product can meet the consumers’ physiological, safety, belonging, self-esteem and self-actualisation needs.

McClelland’s Needs Theory

McClelland has identified three types of basic motivating needs, i.e. need for power, need for affiliation and need for achievement. The ability to influence or induce behaviour is power. As per this theory, the need for power is the desire to be influential in a group and to control one’s environment is an important motivation factor.

Need for affiliation is the desire for human companionship and acceptance. Those with high need for affiliation often behave the way they think other people want them to, in an effort to maintain friendship.

Need for achievement is the desire to achieve. People with a high need for achievement always feel ambitious to be successful and are ever prepared to face challenges.

McClelland has identified four characteristics of high achievers.

  • Take moderate risk
  • Want immediate feedback
  • Find accomplishing a task more satisfying
  • Put maximum efforts in completing task

An organisation who is new in the market or existing organisation who is launching new product range can target people having these characteristic. These people will be ready to try something new, they will be able to provide feedback to the organisation about the products or service immediately.

Consumer Learning

Learning happens through information, experience and practice (repetition of reinforced behaviour), and it brings a change in behaviour. In simple words, a person’s life experiences and information that he has gained from multiple sources is his learning. For example, when a consumer has a pleasant experience with a product, they will want to buy it again while an unpleasant experience with a product or brand will deter them from making repeat purchases.

There are two forms of learning theories i.e. behavioural and cognitive learning theory. Both the theories contribute to an understanding of consumer behaviour. Behavioural theorists consider learning as observable responses to stimuli; whereas cognitive theorists believe that learning is a function of mental processing.

Two Types of Learning Theories

Behavioural Learning Theory

Psychologist B.F. Skinner influenced the behavioural learning theory which suggests that learning takes places through a series of internal and external factors. Rewards and punishments help in shaping learning in people. According to Skinner, learning occurs through a trial-and-error process wherein positive outcomes lead to repeat behaviour. For example, discounts provided a seller lead to repeat purchases by consumers.

Cognitive Learning Theory

Cognitive learning refers to the complex mental process of inclusion of entire mental activities of consumer in resolving the issues of purchasing specific products or services and resolution of the situation occurred.

Cognitive learning involves learning of:

  • Ideas
  • Concepts
  • Attitudes
  • Reasoning abilities

Cognitive learning theory explains learning by concentrating on changes in the mental processes that occurs as a result of people’s efforts. This theory focus on thinking rather than just behaviour. For example, asking consumers to provide feedback on a particular product, justify and explain their thinking.

There are three key points in consumer learning:

  • Consumer learning is a continuously evolving process and it keeps one volving as an individual acquires new knowledge.

  • Consumers gain new knowledge through sources such as reading, discussing, observing, thinking, personal experiences, etc.

  • The newly gained knowledge serves as feedback in the learning process.

Marketers use learning theories to design marketing strategies to ensure that information about their products reaches consumers. The understanding of the process of learning is extremely useful to the marketer. Marketing campaigns are designed around marketers’ understanding of how consumers acquire, absorb and retain information.

Consumer Personality

Personality refers to the set of specific characteristics and attributes possessed by each individual. In context of marketing, each consumer has a different personality. Personality develops by an interaction of psychological and physiological attributes of an individual. Personality leads to behaviours such as confidence, anxiety, independence, confidence, self-control, empathy, openness, curiosity, and adaptability.

Consumer personality is the set of consistent responses to environmental stimuli or patterns of behaviour displayed by a consumer. The study of consumer personality is useful to marketers as it provides systematic and consistent information related to consumer experiences and behaviour. Personality characteristics help brands create favourable product positioning. When a brand promotes products or services that a consumer (having certain personality traits) identifies with or aspires to possess, then, the consumer will be drawn to it automatically.

Type of Theories of Personality:

Psychoanalytic Theory

This theory highlights id, ego and superego. The id is that part of personality which is present at birth. The id is inherited, primitive, inaccessible and completely unconscious. The ego is the logical, rational, realistic personality part which is evolved from the id. The ego draws its energy from the id. Superego is the moral component of personality which is formed when the child’s age is 5 or 6. A detailed explanation of id, superego and ego has already been given in the previous chapter.

Type Theory

This theory scientifically describe personality by classifying individuals into convenient categories such as extrovert (outgoing, social people) and introvert (less sociable, absorbed in inner life). William seldom categorised people as:

  • Endomorph (bulky and beloved)
  • Mesomorph: (basically strong, athletic and tough)
  • Ectomorph: (thin, long and poorly developed physically)

Trait Theory

For measuring personality, a quantitative approach known as trait theory is used widely. According to this theory, an individual’s personality is composed of definite attributes due to which individuals behave in a particular manner.

Various trait theorists have developed personality tests to measure traits such as consumer innovativeness, consumer rigidity or susceptibility to interpersonal influence, openness to foreign products, etc. and these can be used to understand how consumers make their purchase decisions. Based on such tests, marketers can make their marketing decisions.

Consumer Perception

In psychology, perception is defined as a cognitive process through which people attend to incoming stimuli, organise and interpret such stimuli into behaviour. Perception is also defined as a process by which an individual becomes aware of, organises, interprets and retains external stimuli to make sense of their environment.

A person acts in accordance with their perception of a situation at a given time. Perception involves three key processes: selective attention, selective distortion, and selective retention.

Let us try to understand what each of these means:

Selective Attention

Each individual is more sensitive to certain details or stimulus to which he or she is subjected to and tends to focus mainly on these. People are usually more attentive towards unexpected or unusual stimuli and are able to retain such stimuli for long.

Marketers try to understand the concept of stimuli so that they can attract more and more people. Marketers use their understanding of stimuli and how consumers respond to stimuli to devise marketing campaigns and more specifically, advertisements, to gain and retain consumer attention.

The degree to which an individual pays attention also changes with the activity of the individual and the number of other stimuli in the environment. For example, a bored commuter will pay more attention to billboards and banners. The level of attention also varies with the needs of an individual. For example, a person looking to buy a new TV will be more sensitive to advertisements of different TV brands than those of cars.

Selective Distortion

Each person interprets a stimuli in a unique manner in order to make them consistent with his or her experience, personality, state of mind, beliefs and attitudes. Thus, two different people will have different interpretations of the same stimulus and this is called selective distortion. Selective distortion means that the message communicated by brands will be perceived differently by different consumers. Brand marketers must try to understand how different consumers would perceive their brand in order to improve their branding efforts.

Selective Retention

A person cannot register and retain all the stimuli and information to which he or she is exposed. They store only those parts of a particular stimulus that are closer to their interests, values and beliefs. This is called selective retention. For brands, it means that consumers remember the good aspects of a brand or product they like and neglect the drawbacks. Also, they will fail to notice the good aspects of competing brands and products. Therefore, marketers need to use a lot of repetition to ensure that consumers register their brand.

Consumer Imagery

Consumers usually form images of the products or services when they are faced with marketing stimuli and this is called consumer imagery. They form images in their minds regarding the different product or service offerings and the marketing mix.

Consumers process all the information they are exposed to over time to form an image or perception of a product or brand. Over time, consumers develop enduring perceptions or images about products, brands, stores and prices.

Perceived Image

The marketer uses various strategies to create an image of the product and brand in the mind of the customer. How the consumer perceives brand image this with respect to competition is known as positioning. Marketers want to position their brands with a distinctive image that stands out from the competition.

Perceived Price

The way a product is priced can create an image in the mind of a consumer. For example, consumer gets impacted by pricing such as ₹499/- only instead of 500 or 20% off MRP because the consumer perceives them as lower prices resulting in savings.

Perceived Quality

Consumers use intrinsic cues such as the physical characteristics of the product, and extrinsic cues such as brand image, retail store image, country of origin, etc., to form an opinion about the quality of the product.

Perceived Risk

Sometimes, consumers face uncertainty when they fail to predict the outcomes of their purchase. This makes them perceive risk with the purchase. The reasons behind this uncertainty could be incomplete information about the product, newness of the product, high price, etc. There are five major groups of risks that consumers face when making purchase decisions.

These risks are explained as follows:

Financial Risk

Financial risk is the uncertainty that the product may not be worth the cost at which it is bought. In general, highend, luxury, and expensive products are more proneto financial risk.

Performance Risk

Performance risk is associated with the likelihood that the product may not perform as expected or may fail completely. Technically, complex products are more prone to this risk.

Physical Risk

Physical risk is associated with the likelihood that using a product may cause bodily harm to users or to others. Certain foods and beverages, electrical appliances, mechanical devices, medical services etc. fall under this category.

Social Risk

Social risk is associated with products whose purchase may not fall within the standards established by an important reference group or social class such as friends, family, society in general, etc. Products such as clothes, cars, etc. are more prone to this risk.

Psychological Risk

Psychological risk is linked to products that clash with and are inconsistent with the individual’s morals or sense of self-identity.

Price-quality Relationship

Apart from being an indicator of purchase cost, consumers also use price as an indicator of product quality. Often, consumers may perceive a product to be of better quality because of its higher price.

Consumer Attitude

Consumer attitude may be defined as the direction and degree of enthusiasm and interest (or lack of it) that a consumer has towards a brand or product. A consumer with a positive attitude is more likely to buy a product. Consumer attitudes are shaped by consumers’ experiences, learning and external influences and affect their buying behaviour. Consumer attitudes are not constant and change according to situations. Marketers try to mould the attitudes of customers towards their brand(s) by designing effective marketing campaigns.

According to tri-component model of consumer attitude, consumer attitude comprises of three elements explained as follows:

Cognitive Component

The first component is the cognitive component which relates to consumers beliefs. Cognitive component involves beliefs or the degree to which consumers believe that a brand has certain attributes. It is shaped by personal experiences or information gained by consumers from various sources. For example, a consumer believes that ABC brand produces too spicy chips.

Affective Component

The second component is the affective component and deals with consumers’ feelings. This component involves brand evaluations or the degree to which consumers prefer certain brands over others. This component includes how a consumer feels about a particular brand or product. For example, a consumer may have a fear of eating spicy chips.

Conative Component

The third component is the conative component and deals with consumers’ intentions. This component relates to a consumer’s plans or intention to buy a particular product. A consumer’s intention to buy a product is influenced by his/her personal beliefs and external influences. For example, a consumer directly rejects when he sees spicy chips.

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